How much can we give our daughter this year

Kerry_o'keefe

Is there a maximum amount of money we can give our daughter each year to save in her building society without incurring any tax problems ?

The amount of interest she earns will not take her anywhere near single person tax allowance.

I have read somewhere it is £250. Could both parents give £250 each ?

Thanks in anticipation.

Kerry

Robert_Sterling_3

Each of you can give as many people as you like £250 each.
So yes you could each give her £250.

Then again

Each of you is also allowed to give £3000 per annum to your daughter.

So you could give her up to a total of £6000 each year by each giving her up to £3000. If you give the £3000 you can not also give the £250 though.

If you did not give away £3000 each in the previous year you can give away
£6000 each this year.

So you can in this circumstance give £12000 altogether to your daughter this financial year

plus another £6000 after april 5th next year.

That should just about cover it.

That is just the begining. I have a few more tricks up my sleeve.

Kerry_o'keefe

Many thanks Robert. Unfortunately we do not have that sort of cash but more than £250. Your advice is of great help. thanks again

isasmurf

The amount of interest you daughter receives from money that you give her cannot earn more than £100 (for each parent). This is interest earned on all money you have given her since birth.

Robert_Sterling_3

If you give your daughter money that is part of your everyday expenditure then you can give as much as you like provided it does not come from your capital.

If a child's income from INTEREST on money given to them by their parents is under £100 per annum then usi Inland Revenue Form IR85 as not tax will be due on the child's savings.

So this works OK usually for up to about £1900 capital.

However if the interest exceeds £100 then all the interest is taxed.

This is to prevent parents puting a lot of their own money into their child's name to evade tax.

It is OK for grandparents and indeed anyone who is not the child's parent ( God parents, aunts & Uncles etc ) to give a child as much as they like ( Subject to IHT rules ) and the child does not have to pay tax as long as the interest comes within the childs tax free allowance.

simonleblank

Hi Robert, what happens if the child is 16 years old and still at school please?

Robert_Sterling_3

I think a child is a child until they are an adult at 18 but I could be wrong.

charlieboycat

Robert_Sterling wrote:

I think a child is a child until they are an adult at 18 but I could be wrong.

I believe this is generally correct - however, I think that someone who marries aged under 18 ceases to be a child upon marriage.

Robert_Sterling wrote:

However if the interest exceeds £100 then all the interest is taxed.

Worth noting that in this situation the interest is taxable on the parent who made the gift (ie. possibly subject to 40% tax), not on the child.

isasmurf

With regards to the R85 registration (to receive interest tax free) - it expires on the 5th April following their 16th birthday. If they still expect their total income to be lower than their personal allowance they must fill out a new form.

realaledrinker

Has anyone any anacdotes to tell whereby they know of a situation where someone was caught out by the £100 provision regarding child's interest received from money given by a parent? i just don't see how it would be flagged up at HMC.

Robert_Sterling_3

It is not a major crime unless the amount of tax saved is high.
If there is a large some of money in a childs account and the interest is significantly above £100 per annum ( per parent ) it could easily be picked up. Whether it is though I am not able to say.