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Ns&i Index Linked

dr ray

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NS&I currently pay 1% on top of RPI and its tax free. For a higher rate tax payer this is better than any building society or bank account and of course it is safer.

It says on the pamphlet you can purchase on behalf of a child under 7. I am presuming a child over seven can purchase in own name.

One of the downsides is that you can only buy 15K per issue. There are 2 x 2 issues a year (3 and 5 year terms) but it still makes it unsuitable for a big single deposit like a STR pot.

Thats the background.

What I want to know is whether an adult can buy the maximum amount in own name and then buy for children too. With 3 children that would mean sheltering £240k over a whole year (not counting wife who is standard rate tax-payer).

I know it generally doesn't make sense to buy tax free products for kids as they don't pay tax anyway but if they earn more than £100 interest from money I give them it is taxed at my (higher) rate so it still makes sense.

I have never seen this recommended or discussed in any magazine or personal finance articles (presumably because there is no commission on selling NS&I).

Can anyone confirm this is right or am I going to get done for tax evasion?

Edited by dr ray
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