Using your child's Income Tax Allowance ?

MoneyTown

As far as I understand it everyone under 65 in the UK starts with a standard annual tax free income allowance.

I was wondering if it is possible to use a child's allowance to avoid the family paying as much income tax?

Perhaps the child could be paid savings interest income, rental income or 'employed' to avoid income tax?

I haven't found it discussed here.

Is it possible ?

jem16

No it isn't possible. No-one, child or adult, can use anyone else's tax allowance.

Mikeyorks

Perhaps you're thinking of this ? :

http://www.moneysavingexpert.com/savings/child-savings-tax-free

...... which is very different to what you're proposing ...... which is evasion and illegal ..... hence the absence of discussion?

MoneyTown

No evasion wanted.

I just wondered if like a husband and wife distributing assets between them to reduce their tax bill, a child could also be included to have a tax free income allowance.

Perhaps the child isn't thought by HMRC to be old enough to decide to give the money back to the parents lol ?

fengirl_2

Any income earned by a child on assets donated by a parent is assessable on the parent.

MoneyTown

fengirl wrote: »

Any income earned by a child on assets donated by a parent is assessable on the parent.

Mmmmm. Thanks. That kind of scuppers it but still makes me wonder why a 1 year old has a full income tax allowance. What is it there for ?

jem16

MoneyTown wrote: »

Mmmmm. Thanks. That kind of scuppers it but still makes me wonder why a 1 year old has a full income tax allowance. What is it there for ?

Can be numerous reasons such as an inheritance or pension payments from a deceased relative. In most cases you would prefer not to have to use it but it does happen.

jennifernil

Or it could be interest on money given by other relatives. We are saving for our grandson, his parents do not pay tax on that interest.

RainMaker_2

MoneyTown wrote: »

I was wondering if it is possible to use a child's allowance to avoid the family paying as much income tax?

Perhaps the child could be paid savings interest income, rental income or 'employed' to avoid income tax?

Would it be allowable to pay your child for services rendered (cleaning / painting / decorating) at a rental property and claim it as a tax deductible expense ?

mikey72

Providing you apply for the correct license from the council to comply with employment law, it's not a prohibited job, you keep the weekly hours under the limit, and within the correct times, you should be able to. And have the correct insurances to be an employer. And sort out the NI.

RainMaker_2

Why couldn't your child operate on a self-employed basis ?