Designated Account
An investment account informally earmarked for a child or purpose, but legally owned by the adult. The adult remains the beneficial owner and is taxed on all income and gains.
How It Works
A designated account is a standard investment account with a label (usually child's initials) indicating its intended purpose. Legally, it is the adult's account. The adult retains full ownership, control, and tax liability. There is no obligation to use the money for the designated purpose.
Tax Treatment
All income and gains taxed as the adult's at their marginal rates. The designation is a label only — no legal or tax effect. Money remains in the adult's estate for IHT.
Tax Advantages
- Full control — adult can withdraw or redirect at any time
- No restrictions on investment choices or amounts
- Simpler than setting up a trust
Who Is This Suitable For?
Parents or grandparents who want to invest for a child but retain full control and ownership. Unlike a JISA, the adult can withdraw at any time.
Frequently Asked Questions
Designated account vs JISA?▾
A JISA is tax-free but locked until 18 and belongs to the child. A designated account is taxable but gives full control and flexibility.
Does it protect from creditors?▾
No. Legally owned by the adult, so available to creditors and part of the adult's estate.
Can I transfer to a child later?▾
Yes, but this may have CGT and IHT implications as it counts as a disposal and gift.