Use your child - best child savings account

markandjayne

Both my wife and I are investing in the regular saver and have for several years. The £100 is per annum so as long as you dont accumulate too much in the save4it account you should be fine

lllnorrislll

Daughters Halifax childs regular saver has just matured for last year and re-started for this year fine. Money now paid in to halifax save4it account, but just checked the interest on her Yorkshire Building society account before I moved the halifax money accross and it has now dropped to 1.75% AER (as of 29th March 2009) which is still more than the save4it 1.55% AER but is there any other better accounts out there which are easy to access (I want a bank/building society with a branch in the majority of major cities or online, not a building society with 1 branch deep in scotland etc)

Thanks

Mikeyorks

markandjayne wrote: »

The £100 is per annum so as long as you dont accumulate too much in the save4it account you should be fine

That's correct. The £100 is per annum and it applies to each contributing parent. But it applies to the aggregate interest from the RS (one year only) and the Save4it (can hold many years funds).

So it is very easy to exceed the £100. Having said that ..... there is no direct mechanism to notify HMRC that the £100 is exceeded. And I think there would need to be a substantial sum in a childrens account(s) before the annual returns from Institutions registered on the HMRC awareness.

nukebox

Mikeyorks wrote: »

That's correct. The £100 is per annum and it applies to each contributing parent. But it applies to the aggregate interest from the RS (one year only) and the Save4it (can hold many years funds).

So it is very easy to exceed the £100. Having said that ..... there is no direct mechanism to notify HMRC that the £100 is exceeded. And I think there would need to be a substantial sum in a childrens account(s) before the annual returns from Institutions registered on the HMRC awareness.

So, for sake of argument, if the Save4It account paid 10% gross, then having £1000 in there would reach the limit - essentially meaning that opening up another Regular Saver (ever again) would breach the limit - or is it £2000 as the child can earn £100/yr/parent (assuming 2 parents)?

I guess we just need to keep an eye on the total amount of interest earned for a child is no more than £200 with contributions coming from both parents.

Mikeyorks

nukebox wrote: »

or is it £2000 as the child can earn £100/yr/parent (assuming 2 parents)?

Yes .... it's £2000 as in your example. £100 for each contributing parent.

I wouldn't worry overly much about sticking rigidly to the 2 x £100. There is no requirement for you to declare any child's account that's breaching this limit to HMRC. It doesn't figure, for example, on either the SA or P810 Returns?

The £100 limit is to prevent parents shielding their own funds under the additional umbrella of the child's Personal Allowance. But the cost, to HMRC, would exceed the yield if it was applied to the average child's account. The legislation is there to enable action where it can be seen there is material benefit accruing to the parent rather than the child.

deefadog

Something i am unsure about is, with the childs savings which we have in the Halifax at the moment, say we needed money to spend on our child, could we actually do this. i.e if a trip in school came up abroad costing £1000, could we just withdraw this for the purpose, or would tax be applied to what we take out?

Thanks for any help

nukebox

deefadog wrote: »

Something i am unsure about is, with the childs savings which we have in the Halifax at the moment, say we needed money to spend on our child, could we actually do this. i.e if a trip in school came up abroad costing £1000, could we just withdraw this for the purpose, or would tax be applied to what we take out?

Thanks for any help

Until the child starts being responsible for the money (16yrs IIRC), the money is yours to do with as you please. I don't believe there is any tax issues in doing so.

Of course the ethicality of the reasons is whole different discussion. Your example above, IMHO, is good use of the money

deefadog

Great news. Yes i agree it's shaky ground, between parents having an extra tax free account or trying to do the best for your children. Well we have a while to go until we need to pay for trips etc and we may be in a position that we don't have to touch it, but it's nice to know.

girlatplay

Remember that you can't withdraw from the Children's regular saver within the year (or the account will close and you will only get interest on the money at the save4it rate :eek: ).

If you want to withdraw and use money for your child for a school trip etc I don't think there would be tax implications.

Any money held on behalf of a child is the child's money and should only be used for the benefit of the child.

:j

KJF1

I applied for the 8% Halifax childrens saver at the start of April.

Got the paperwork through today, interest rate's now 6%.

I may have words when I take in my proof of ID tomorrow.