Use your child - best child savings account

Barsiem

That's what I thought. Shame really as it's the kids who miss out due to others who would look to abuse the system!

Thanks for the help

paul2louise

xylophone wrote: »

See this guidance and example from Northern Rock http://www.northernrock.co.uk/savings/learn/childrens-accounts/
The £100 rule applies separately to each parent. The £100 rule applies to income arising each year and it does not matter whether the fund is comprised of part capital and part added interest. The £100 rule applies as long as income is over £100 in any one year for any one child from one parent.

For example, if a parent gives a child £2,000, which earns £98 interest, the interest belongs to the child for tax purposes and the account can be registered for gross interest. But if the £98 is added to the account, leading to £101 interest being earned in year 2, the interest has now exceeded the £100 limit. This means it now belongs to the parent for tax purposes and the account cannot remain registered for gross interest.

So reading this, if the amount saved reaches a point where the interest starts to reach more than £100 then you could put this money in an isa and start again saving? But I presume once the money goes into the Isa then you can't withdraw the money until he is 18.

Are grandparents allowed to open accounts for grandchildren if they have some ID for the child. Then the account can earn more interest. before I read the notes on this forum my mum give me 5k to invest for my boy. The account was opened by me but my mum gave me a cheque that I paid into my current acc then transferred the money into this acc. Is this proof enough for the tax man.

xylophone

in an isa

Do you mean JISA?
Remember that the £100 (per parent) per year is income from all and any parental gift for the tax year

paul2louise

xylophone wrote: »

Do you mean JISA?
Remember that the £100 (per parent) per year is income from all and any parental gift for the tax year

Yes a JISA.
Not sure what you mean. I just wondered how I can prove the money comes from my mum not me. I am not working at present so am not earning any income. Does that mean that it wouldn't be taxed as I am not being taxed at the moment. Does it matter that my husband is paying tax. The account that is funding my boys savings is from our joint acc which I have not paid any salary into for 2years now.

I think I need to give HMRC a call to clarify all this

xylophone

Have a look at this http://www.hmrc.gov.uk/tdsi/example5.htm
and http://www.hmrc.gov.uk/tdsi/children.htm
http://www.direct.gov.uk/en/MoneyTaxAndBenefits/ManagingMoney/PlanningYourPersonalFinances/DG_10013916
Your mother could simply transfer the money from her bank account to the child's account or could state in writing, in the case of a query, that a sum of/sums of.... were given by her to her grandchild.
Money in joint accounts is usually regarded as half owned by each party but see http://www.hmrc.gov.uk/manuals/saimmanual/saim2420.htm

Remember that the £100 is per parent so that anything over is taxed as the income of that parent at his or her highest marginal rate.

It is much simpler if any money saved for a child by parents is saved in tax free vehicles like the JISA, children's bonus bond etc.

Then building society accounts can be kept for gifts from other people.

emontgomery22875

After having the Halifax 6% Childrens savings account for a year - my wife and I have realised that they are selling account purely on the headline interest rate alone.

You have to set up a standing order, at a set amount per month between £10 and £100, which you can only change by going in to branch or by telephone. We paid in the maximum of £100 for all 12 months and earnt £33 interest. The thing that suprised us is that the lump sum can not stay in this account when beginning the second year of saving. The maximum you can earn is £33 per year.

On top of this, we now can't view this account on our online banking page as it is a Lloyds policy for childrens accounts apparently.

paul2louise

emontgomery22875 wrote: »

On top of this, we now can't view this account on our online banking page as it is a Lloyds policy for childrens accounts apparently.

Do u mean Halifax not Lloyds.
I realised he same thing and my account with the Halifax has just matured. I am off to Halifax tomorrow to close the acc and move the money into the Lloyds savings acc. You can vary how much you pay in and relatives can make payments too. Seems a much more flexible account than Halifax. I didn't even need to sit for an appointment, just picked up a app form and dropped it back into branch with some ID. So much easier than wrestling with a toddler during an appointment.

Froggitt

Huh? I did a lump sum of £3600 for each of my kids, now earning 6% and far more than £33 pa.

snowcat53

emontgomery22875 wrote: »

After having the Halifax 6% Childrens savings account for a year - my wife and I have realised that they are selling account purely on the headline interest rate alone.
...
We paid in the maximum of £100 for all 12 months and earnt £33 interest.

Well, the account is what it is - as with any account it only earns interest on the amount invested.. If you could put the full 1200 in at the start for the whole year you would earn £72 interest.. In fact you have 100 in for 12m, 200 for 11m, 300 for 10m,etc, so as a first approximation you'll earn half 72.

Tomothy_2

Yeah if your child is minor than you can become the guardian of your child and you can save the savings of your child which is a good way to enhance the future savings of your child.