Use your child - best child savings account

hydrochloric_acid

How do relatives PROVE who has paid money into child accounts so that tax is not owed? My grand-daughter's account has a passbook so the only way to pay in cash or cheques is in 'her' local BS branch. The passbook entries give no indication who paid in deposits so how do parents prove that they have not done so? Also, some relations make cheques payable to parents who then have to pass this money through their account, creating impression it was their own gift. Any Ideas out there?

fagun

hydrochloric_acid wrote:

How do relatives PROVE who has paid money into child accounts so that tax is not owed? My grand-daughter's account has a passbook so the only way to pay in cash or cheques is in 'her' local BS branch. The passbook entries give no indication who paid in deposits so how do parents prove that they have not done so? Also, some relations make cheques payable to parents who then have to pass this money through their account, creating impression it was their own gift. Any Ideas out there?

I keep separate accounts for money given by us (as parents) and money given by others. I also write down details of the money gifted by others (e.g. Grandparents - Birthday £50). It means that interest earnt on money we've given stays separate.

Tracyk_2

Who does the taxing of the interest if it goes over the £100? Does the B Soc do the calc - or do you have to declare it on your tax return?

grumbler

Tracyk wrote:

Who does the taxing of the interest if it goes over the £100? Does the B Soc do the calc - or do you have to declare it on your tax return?

It's not a bank's job to do this. And you can have many accounts with the same bank of different banks. I think, you must declare it, but am not sure that you must do it on your tax return. The other way is to spread money between two or more accounts so that those registered to recieve interest gross don't generate more than £100.

Tracyk_2

What counts as income for a child?
If I put £15k into their account - does that mean their income is £15k and will get taxed on the bit above their allowance - or is it the interest generated on the £15k is the income?

exil

Have answered that elsewhere.

A comment though - a few people here are using a child's account as if it were their own. Whatever tax reliefs there are on kid's accounts are on the basis that it's the childrens' money, not yours. If the revenue read this thread I wonder how long the tax concessions will last.

fagun

Tracyk wrote:

What counts as income for a child?
If I put £15k into their account - does that mean their income is £15k and will get taxed on the bit above their allowance - or is it the interest generated on the £15k is the income?

The interest (the 15k is capital and potentially subject to IHT)

jonesMUFCforever

If you feposit £15k into a child's account you will for certain be investigated by the money laundering police of the bank/building society who will no doubt involve HMC&R into what is tax avoidance.

Tracyk_2

Not tax avoidance if the grandparents are depositing the money. and I know about IHT probs.

fagun

Tracyk wrote:

Not tax avoidance if the grandparents are depositing the money. and I know about IHT probs.

In whihch case you don't have to worry about income tax either. Income from money given by others doesn't count towards the £100 limit. I'd suggest keeping the money in a separate account to any that you've given. Its a lot easier to distinguish between income streams then.