Regular Savings Accounts discussion

There are limits on the amount of interest a parent can earn on savings made in their childrens name, you should perhaps mention this when suggesting that parents invest through their children.

I believe the maximum relates to how much interest can be earned in a year from any money gifted to children by their parents (it is okay for other friends or relatives to do so though). If they earn more than £100 interest then they can be taxed at their parents marginal rates instead. With regular savers that force you to roll your money out after a year it may not be such an issue but, for accounts where money can build up over a longer period, it must certainly be a consideration.

I have never found a particularly good explanation of this rule and how it is applied, for instance, couldn't multiple accounts be opened and since nobody is expecting tax returns from children the IR would have no way of knowing?

Sometimes there are special regular savings rates for childrens accounts.

The Halifax don't advertise very well that for << Savers under 21:
A special rate of interest is available on Halifax Instant Saver, Halifax Saver Reward, Halifax Monthly Saver, Halifax Liquid Gold, Halifax 60 Day Gold and Halifax Bonus Gold accounts if you appear in our records as being under 21. Interest is paid at the special rate or at the tiered rate of interest (whichever is the higher) on any balances of £1 or more on these accounts.>>

Indeed, I think the rate for the Monthly Saver Account (under 21yrs version) is 5.34% AER.

Another good Childrens regular Saver Account is with Scarbrough BS http://www.scarboroughbs.co.uk/docs/investment/product.asp?InvId=416 paying 5.75%.

Hope this of interest to someone

Galstonian wrote:

I have never found a particularly good explanation of this rule and how it is applied, for instance, couldn't multiple accounts be opened and since nobody is expecting tax returns from children the IR would have no way of knowing?

Banks and Building Societies are required to send the Inland Revenue details of all bank accounts, including interest paid and tax deducted. I suppose they can then match all the accounts for an individual to see the total interest received. But this still won't tell them where the money came from. Perhaps they just say it to act as a deterrent?

Well yeah, otherwise Halifax would be discouraging its own current account customers from saving, or worse, forcing them to get a current account at a different bank

Martin's point was about drip feeding from another save, like the websaver

lipidicman wrote:

Well yeah, otherwise Halifax would be discouraging its own current account customers from saving, or worse, forcing them to get a current account at a different bank

Martin's point was about drip feeding from another save, like the websaver

Hmmmm . . . Not quite sure I align with that.

Martin's point was about the Halifax drawing in new cash. So fairly understandable they legislate against funds being purloined from their existing, and lower yield, saver accounts. But the same logic surely applies to their current accounts - it is recirculated - not new - cash and from an even lower yield source? So reasonable to read (as I did until I looked at the finer detail of the Halifax T&Cs) that "you can't SO from one of its existing accounts" - at face value.

I'm grateful for the knowledge of this account, from Martin's note. But I would have been put off if I had to source a current account outside of the Halifax in order to use it. My sole reason for suggesting the original note is revised to qualify it is only Saver accounts that cannot be used - is to prevent others being put off if they don't separately look closely at the Halifax precise T&Cs.