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Childs saving account and Child Benefit

wardrobe
Posts: 44 Forumite
Hi
The Mrs and I get our Child Benefit money (2 kids 5+7) paid into one of the kids child savings account (this is the only use for this account). Theres £10k in there now as we/kids dont spend it and want to let the kids have it when they leave school etc.
I just got the statement today and it says the account earnt £415 interest last year with NIL tax deducted.
should we/kids be paying tax on the interest that it earns? (if so i'll pay the taxman)
thanks
The Mrs and I get our Child Benefit money (2 kids 5+7) paid into one of the kids child savings account (this is the only use for this account). Theres £10k in there now as we/kids dont spend it and want to let the kids have it when they leave school etc.
I just got the statement today and it says the account earnt £415 interest last year with NIL tax deducted.
should we/kids be paying tax on the interest that it earns? (if so i'll pay the taxman)
thanks
0
Comments
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Helpful Linky
"Children can earn £100 interest per year before you're taxed on it. However, don't assume you can dunk fortunes in your kid's name. If a child generates more than £100 interest in the course of the year from money specifically given by each parent, this income is taxed at that parents' tax rate.
In practical terms this means you could put up to £4,400 in the 2.25% top paying children's account, and it wouldn't be taxed, as that would generate around £99. Just to clarify, this doesn't mean £4,400 every year; it's the interest generated from all cash given in this and previous years.
Yet these rules only apply to parents, not grandparents, aunties, uncles or friends – they may all give your children as much as they like and, providing it's a genuine gift, it counts as the child's money without a £100 limit.
The only other tax implications of making cash gifts is the possible spectre of inheritance tax if the donor dies within seven years of making it. And a quick warning, for those bright sparks thinking, “if I gave my brother's kids £10,000 and he gave mine the same….”, well good thought, but no cigar. If the Inland Revenue spots you, you're in trouble."0
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