Child Saving Tax Allowance- Help please

trynsave

I have three children under 9. I have been saving a sml amt (£15) regularly for them each month in designated a/c's which I have declared to be Gross status.

My question relates to the interest they can earn. I understand that they are only allowed to earn £100 interest pa on funds paid to them by parents, but that income isn't taxed from other adults as long as they earn less than their personal allowance.

I am planning on starting to childmind for a friend, and was wondering if she was to pay money directly into individual a/cs in their name, instead of through me, would they get the full use of their annual tax allowance, or would it be restricted to the £100 pa interest? is it still counted as my income?

The money will stay theirs long-term as it is for their future university/house deposit/car etc. I do not want it back, so is not some sort of tax evasion plan. I just want to earn some money directly for them and their future, but is it possible and not pay tax?

opinions4u

You earned it. It's your income.

If you then pay it in to your kids' accounts, any interest earned should, effectively, be taxed as yours once you've breached the £100 rule.

If you handed money to your parents for the help they give you in life, and they accidentally opened accounts for their grandchildren, then the interest earned can be set against the kids' tax allowances.

Alternatively, if they each have a Child Trust Fund, top this up.

Money_Grabber13579

As stated above, you would have to gift the money to them if you wanted to make use of their personal allowances. However This limit is £100. (Again mentioned above.)

The total amount of interest each can earn is £6035 for 08-09 and £6475 for 09-10. I didn't plan repeating everything that was said above, but I'd hate to delete it after I've typed all that!