Best place for under 16's money?

phoebe03cat

My daughter has around £6000 + at present in a nationwide smart account. We could safely put £6000 away for a year. Can she use adult fixed rate accounts and say she is a non taxpayer or do they specifically have to be the children's ones? She is just 15. Would welcome any ideas as to how she can secure best rates for the year pls. Thanks

Masomnia

Just done some digging, and I guess you're getting 3.25% at the moment? That's not too bad given the current situation.

Her being under 18 does limit your options quite considerably. I've checked a few of the better rates and they want you to be over 18, though Yorkshire Building society offer one for 16+ years, worth thinking about or next year. Lots of building societies do offer better rates by the looks of things, but invariably they need to be accessed by branch and/or post. How important is online banking to you? Also a lot of the better accounts require you to keep the money deposited until she is 18, which doesn't sound ideal for you.

It's looking like you may be best just sticking where you are to me. Like I say 3.25% isn't too bad at the moment.

opinions4u

phoebe03cat wrote: »

My daughter has around £6000 + at present in a nationwide smart account. We could safely put £6000 away for a year. Can she use adult fixed rate accounts and say she is a non taxpayer
Yes. Check the age requirements of the provider though as some will and some won't.

or do they specifically have to be the children's ones?
I'm not aware of any fixed term accounts for kids - but if the adult rates is acceptable then this may not be important.

She is just 15. Would welcome any ideas as to how she can secure best rates for the year pls. Thanks

I think you should wait a week or so to see how the market settles down. Most providers are now confirming what their rates are following the last BofE rate cut. Don't wait too long though as another BofE rate cut is possible soon.

You could also drip feed £100 a month in to a Children's Regular Saver account with Halifax and get 8% fixed on that part of the money.

http://www.halifax.co.uk/savings/children.asp

Their 2.55% Save4It has always been there or thereabouts as the leading kids account, but as this is variable (and has dropped by a full 1%) it may not be quite as competitive as providers reduce their rates around now.

If she is a non-taxpayer, then parents can register the "R85" status until she is 16. Then she has to do that for herself.

If it's money you are intending her to keep for a longer term, it may be worth shovelling £3,600 in to a cash ISA when she is 16 and the rest a year later. This will depend on her likelihood of becoming a taxpayer and how ISA rates compare to non-ISA rates at that time.

cloud_dog

phoebe03cat wrote: »

My daughter has around £6000 + at present in a nationwide smart account. We could safely put £6000 away for a year. Can she use adult fixed rate accounts and say she is a non taxpayer or do they specifically have to be the children's ones? She is just 15. Would welcome any ideas as to how she can secure best rates for the year pls. Thanks

Just a comment/ info.............. I assume you are aware of the Inland Revenues rules/limits regarding interest earned on a childs account where the parents have provided the money?

If a childs account generates more than £100 interest pa and the deposits came from a parent then the interest is taxed at the parents highrst tax rate.

cloud_dog

martinman3

Masomnia wrote: »

Just done some digging, and I guess you're getting 3.25% at the moment? That's not too bad given the current situation.

It's looking like you may be best just sticking where you are to me. Like I say 3.25% isn't too bad at the moment.

Unfortunately, that was yesterday, rate from today is 2.25%.

phoebe03cat

Thanks for all thoughts. Think I may just sit it out, keeping an eye on the ball of course. She will be going to uni I imagine in due course. Unless things change will start to build up her isa allowance at the first chance.
Her deposits have come from her astute saving from a mixture of sources, mostly relatives-granny etc but not soley from us. Where do we stand with this then pls?

opinions4u

phoebe03cat wrote: »

Thanks for all thoughts. Think I may just sit it out, keeping an eye on the ball of course. She will be going to uni I imagine in due course. Unless things change will start to build up her isa allowance at the first chance.
Her deposits have come from her astute saving from a mixture of sources, mostly relatives-granny etc but not soley from us. Where do we stand with this then pls?

Interest on money accumulated from non-parents is taxable as the child's income - usually this means register an R85 gross declaration and there's no tax to pay.

Interest on money accumulated from parents should be taxed at the parents' highest rate if it exceeds £100. This is to stop people using their children's tax allowances to evade tax.