Use your child - best child savings account

jonesMUFCforever

grumbler wrote:

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.

I'm afraid it is. The Banks have to send a list of all customers getting credit interest over a certain figure (sorry don't know what this year's is) to Inland Revenue.
Years ago when I first started in the bank this was done manually in branches but these days is done centrally.This applies to any type of account where credit interest is paid.

grumbler

ejones999 wrote:

I'm afraid it is. The Banks have to send a list of all customers getting credit interest over a certain figure (sorry don't know what this year's is) to Inland Revenue.

However, the question was:

Who does the taxing of the interest if it goes over the £100?

I think, banks don't tax the interest, but just report to IR. Isn't it the customer who must pay tax directly to IR in this case?

jonesMUFCforever

grumbler wrote:

However, the question was: I think, banks don't tax the interest, but just report to IR. Isn't it the customer who must pay tax directly to IR in this case?

But tax is deducted at source.
For standard rate tax payers their liabilty for tax ends there, higher rate payers have to declare interest on their tax return and pay that way but normally a child's account will have had an R85 form signed by parent or guardian stating that their income is less than tax allowance of £4895 pa to enable bank to pay interest gross.
If one of these accounts suddenly gets interest of several hundred pounds a year then HMR&C will take an interest and may well start an investigation.
I have seen it myself when parents have put thousands of pounds into a child's account then a few months later came back to the bank wanting to withdraw it. This was refused as since date of deposit the child had had his/her 11th birthday and as account was not in the name of the parents they had no access to the funds.
They had to bring in the child from school after going home to get his passport for id in order to make the withdrawal.
The incident was reported by me to the bank's money laundering department. Unfortunately you never get to know what happens in these cases.

grumbler

ejones999 wrote:

But tax is deducted at source.

I am sorry, but you haven't convinced me. If account is registered to receive interest gross (R85), bank cannot deduct tax. The most it can is to report to IR.
I agree that some other problems can take place.

$17mma

Ok

Be gentle to me I am new to this savings account thing.

Anyhow I have two little ones and next week all debts will be clear and I will be ready to start saving. I want to take advantage for the the tax free savings that they are entitled to. I have read on some threads accounts that give up to 10% on savings. Is this correct?

And I am unsure as to how much I can put into an account for them each without it being taxed.

So which will be the best savings account for my little ones one of them already has an allowance of min £150 per month so it will be ok to add to this if min payments are needed into an account.

grumbler

$17mma wrote:

And I am unsure as to how much I can put into an account for them each without it being taxed.

This is not about how much to put into, but about how much interest... Read Martin's article that is discussed here and this thread: Interest on childrens savings.
Halifax Children's Regular Saver generates about £65 interest p.a. if full £100 is saved every month.

$17mma

grumbler wrote:

This is not about how much to put into, but about how much interest... Read Martin's article that is discussed here and this thread: Interest on childrens savings.
Halifax Children's Regular Saver generates about £65 interest p.a. if full £100 is saved every month.

hmmm £65 is not much is it but still better than nothing. Is this Halifax account the best on the market at the moment?

grumbler

$17mma wrote:

hmmm £65 is not much is it but still better than nothing. Is this Halifax account the best on the market at the moment?

£65 is a huge interest. It is 10% on the average balance during a year. All these 10% accounts make only losses for banks. They keep them only to attract customers. You cannot get more than 10% on savings now.

$17mma

grumbler wrote:

£65 is a huge interest. It is 10% on the average balance during a year. All these 10% accounts make only losses for banks. They keep them only to attract customers. You cannot get more than 10% on savings now.

Thanks grumbler I am going to head to the Halifax this afternoon and open two accounts for the kids, then get OH to do the same tomorrow.

grumbler

$17mma wrote:

Thanks grumbler I am going to head to the Halifax this afternoon and open two accounts for the kids, then get OH to do the same tomorrow.

... Just wanted to address you to the website to have a look what documents you need.... ... Halifax Children's Regular Saver. However, cannot find a list of appropriate documents. I think Birth Certificats and usual documents to prove your ID and address will be OK.