This enables you to invest on a child's behalf in such a way that they become the beneficial owners of the shares (i.e. they will benefit from all the income and capital growth). Funds held in a “designated” account are not held by the child, but are solely owned by the parent or grandparent. Designating a fund only provides the intention to pass the funds on to the child. Setting up designated accounts on the Aegon platform couldn’t be easier, simply fill in an investment funds application form and choose to hold units in your own name and “designate” them to the child, on whose behalf you are holding them, by adding the child's name or initials to the form.
Greater control - if the child is not ready to handle the money at 18 years of age, the parents or grandparents are under no obligation to hand over control of the funds to them.
Flexibility - parents can dip into the funds if there is an unforeseen need for the money.
Savings may be liable to tax - parents need to be aware that any capital gains made, above the annual allowance, will be subject to Capital Gains Tax (CGT) at the parent's own rate and any income earned over £100 per year will be added to their own tax position. However, the £100 rule does not apply for grandparents and family friends, who may give as much as they like without income earned being added to their own tax position.
Designated accounts can also be used for investments into your own personal account. You can use them for separating specific holdings from the rest of your portfolio, should you want to earmark that money for something in particular e.g. “House”, “Holiday” or “School fees”, etc.