Best place for 16 year old's savings?

WNBRich

My son turned 16 in May, and his annual interest from the Nationwide Smart account is almost £100. It's possible that the taxman might tax me on the interest when it exceeds the £100. I'm thinking of suggesting to my son that he transfers his savings to an ISA, probably the Barclays Instant Access TAx Haven, which pays 6.25%. This way there is no risk of me being taxed on his interest, and Barclays is paying a better rate than Nationwide.
Do you think that this is a good idea?

Lokolo

Why would you get taxed for his money?

Aegis

Lokolo wrote: »

Why would you get taxed for his money?

It's the rule for when a parent has given money to a kid. If the total interest is under £100, it can be taxed as the child's money, if it's over £100 then the whole amount is taxed as the parent's income.

Lokolo

Surely they don't class a 16year old as a child?

Aegis

Lokolo wrote: »

Surely they don't class a 16year old as a child?

It wouldn't entirely surprise me if they did... Undoubtedly part of the reason for this rule is to stop parents from essentially using their kids as tax-free investments for their savings accounts.

savingpennies

My daughter is 16 and we have the same problem. I got her to open an ISA - we looked around at the best deals and she decided to go for a fixed rate, not with the Nationwide because of all the problems with the delays in opening accounts, which by the way Barclays have had as well.