children's account with coventry...confused

searcher30

after reading about a rate of 7.25% for children's savings (family benefit) being paid into the Coventry account for one year i opened an account which i believed to be in my child's name. Coventry replied back that because the child benefit was in my name then the R85 should be made out in my name.i dont understand why i should be filling this under my name if it is for my child. can someone explain this to me? thanks in advance.
also coudl someone remind me how much a child is allowed to earn before having to pay tax. i remember reading also that if the grandparents opened an account then they would get a higher allowance - is this correct?

Bernard_Coleslaw

The Family First account is classed as a parent's account, not a child's account. Therefore the account you've opened will be in your name, not your child's name, as it is you that receives the child benefit. So if you're a non-taxpayer it is your name that the R85 should be in.

From memory, I think the amount a child can earn in tax-free interest is about £100-£120 per year, however this was several years ago and may have changed since.

I've never heard about allowances being higher if grandparents open an account on behalf of a child. Not sure if this is the case no doubt someone more knowledgeable will be along at some point.

Hope this helps.

BC

Chadsman

A child can earn up to £100 interest per year on money that was given to them by their parents. If the child earns per than £100 in interest in any one tax year then all of the childs interest on savings is teated as if it were the parents and is liable to tax at the parents highest paying (savings tax) rate... usually 20% if they are a basic rate tax payer but could also be 40% or 10% or even 0%.
If anyone other than a parent gives money to a child then the child can off set that interest against against their own tax free allowance about (???) £4.8k the same as any other individual (with a few exceptions). In practice most children dont earn £4.8k per year so are entitled to fill in form R85 to receive interest gross.
:beer:

ReportInvestor

Yep.

Coventry's Family First attracts tax at the parent's top rate of income tax.

Which might be 0% for a stay at home mum.

Robert_Sterling

A child has the same personal allowances as an adult. A child can have interest of about £5000 per annum and pay no tax on it. So they could have about £100,000 earning about £5000 a year.

However the money has to be given to them by persons other than the parents.

Family benefits are paid to parents. It is the parent's money not the child's.

searcher30

Thanks for all your advice!!