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Q & A: Instant access for a student
JS, Bucks: In spring 2004, I invested £5,000 in two bonds for my granddaughter in Canada to assist her when she finishes her design course. The bonds mature this year - and she is coming to England to work and study in August. Could you recommend a suitable UK account where she would have instant access to the cash, avoid paying tax (the bond interest will be taxed at source) and the ability to redeem the balance when she returns to Canada? Matt Pitcher, IFA at Towry Law, Bracknell: The right investment for your granddaughter depends on several factors. If she is going to be in the UK for less than five years then she should stick to deposit-based investments, such as the one you have held for her already. If she becomes a UK resident for the period she is over here then I suggest that you give her the money and she takes out a cash individual savings account (ISA) in her own name. This type of account can be instant access, pays a good rate of return and is tax-free. If she's not likely to become UK resident or you do not wish her to have control of the money until she leaves, then the only tax-free option is likely to be investing the money in a cash ISA in your own name. The National Savings & Investments' Direct ISA currently offers an excellent rate of 5.8%, which is not inflated by an introductory offer like some bank offerings. This is an online account, however, and so will require one of you to be IT literate and comfortable with online security.
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