Use your child - best child savings account

agal

debbie42 wrote: »

That's my understanding of it: it's not a per annum allowance. I'd love to be told different, if anyone knows better?

from the HMRC website
If gifts from a parent produce more than £100 gross income a year, the whole of the income from the gifts is normally taxed as that parent’s income. A child cannot get back any tax on that income. Nor can interest paying accounts have interest paid without tax taken off.
(my emphasis)

Leighthal

I am understanding the 100 quid allowance per year.But what I don't get is,is this 'per child' OR for all the accounts that I am a trustee for.I think I'll have to give the IR a ring on Monday to get clarification on this.

debbie42

I appreciate that the £100 limit on interest from a parent's gift is per annum.

This is interest per annum, in total, so I don't think you could, say, gift a child £2000 in one year, then gift them another £2000 in the next year, as then the total interest per annum from the gifts would be £200.

I'd love to get this clarified though.

Froggitt

Leighthal wrote: »

Does this answer my question in post 165?

Assuming interest rate of 5%, to make it easy, you an bung each of your kids £2000 to produce interest of £100 each per annum (must make sure you withdraw the fiver every year or give them maybe just £1800 each, so it does not go over the £100), your missus can also give them each the same amount, and grandparents can give them as much as they like, but keep record of their giving in case youre investigated.

Froggitt

debbie42 wrote: »

I appreciate that the £100 limit on interest from a parent's gift is per annum.

This is interest per annum, in total, so I don't think you could, say, gift a child £2000 in one year, then gift them another £2000 in the next year, as then the total interest per annum from the gifts would be £200.

I'd love to get this clarified though.

Thats correct Debbie.

Froggitt

nilocmac wrote: »

The thing I dont understand is does this mean every year. If not then are you stuck on that amount forever? So you can not save anymore for them.

Correct you are stuck on that amount forever and you cannot save any more for them. But your missus can. And grandparents can bung as much as they want.

baby_boomer

It's a weird rule.

Your working class single mum can't even give £2,000 to her child without it being subject to income tax.

But rich kids' grandparents can give them nearly £100,000 without it being subject to income tax.

£35K is what you need to get through university these days.

debbie42

It does seem odd to me, too. It is only the income over £100 that is taxed at the parents rate, I think. I suppose it's intended to avoid the parent avoiding paying tax on the interest, but the amount is very low, especially considering potential outgoings these days for a child regarding further education, housing etc.

Like many others, I'd like to save some money in the event of my children going to uni or towards a deposit on a house, or whatever. The CTF isn't applicable to mine. I think NS&I are exempt from this rule? Any other good ideas as to where to put a small monthly amount (say £50) away for them?

max2002ad

After the base rate what is the best internet operated childs account ?
As hard as i might i can't seem to come up with a clear answer.

realaledrinker

Halifax Kids reg saver pays 10% pa max £100/month which is transferred into a save4it account at 5.5% each year. No withdrawals during the year.

Scarboro 3 yr childrens bond base rate + 1%, max 1 withdrawal per annum

etc.