Is interest on childrens savings subject to tax deductions

Spon40

In your article "best child's savings" the first section suggests that children have an allowance of 6035 before savings income is taxed. Further down the article it suggests that interest is taxed if more than £100 in a year is generated on the savings. Can you confirm which of these is correct please or if they apply to different types of account etc.

Lokolo

The £6035 is for everyone who is old enough to work. Thats their personal allowance. But for children its different, children can have a maximum of £100 before tax. This is to stop parents and such putting their savings in childrens names and getting tax free interest.

opinions4u

Lokolo wrote: »

The £6035 is for everyone who is old enough to work. Thats their personal allowance. But for children its different, children can have a maximum of £100 before tax. This is to stop parents and such putting their savings in childrens names and getting tax free interest.

If a parent can show that a child's savings have come from elsewhere (e.g. grandparents) then the £100 rule doesn't apply.

The rule only applies if it has come from the parents' own capital.

Get Granny to write a letter confirming a gift - and keep the letter!