Childrens Accts

pr4w2b0y

One thing that confuses me is how much can you invest into your childs (tax free) account.

For instance why waste your time in drip feeding money into Halifax/Abbey 7% acct as suggested in this site when you can achieve similar or more attractive return on topping up your childs account?

Please advise especially if there are tax implications.

Kind regards
???

cloud_dog

Because the parent can only give monies that will generate interest upto £100 pa, anything more will be taxed at the parents highest tax rate.

Anyone else grand-parents, etc, can give as much as they like.

cloud_dog

pr4w2b0y

So what are you saying is this a known loophole?

Can GP pile in money into their accts? or is there a limit?

cloud_dog

So what are you saying is this a known loophole?

Can GP pile in money into their accts? or is there a limit?

Its no loophole. There are restrictions placed on parents for obvious reasons (i.e. what you were suggesting) but other people (grandparents, etc) can give pretty much without limit. There is a taxation implication however.

The taxation implications (and I haven't researched this so this may not be absolutely accurate - go to http://www.inlandrevenue.gov.uk/ for confirmation) for grandparents, etc is (I think) that any gifts over £3k may attract income tax if the grandparent dies within 7 years of the gift.

cloud_dog

erb

Hi pr4w2b0y,

Which children's account pays as much as 7%?

cloud_dog the tax you refer to on a £3000 gift is inheritance tax not income tax and whether this will be chargeable or not depends on the value of the deceased persons estate when they die.

guavagroove

My dilema is whether to place my kid's money into this drip feed (£25-250/month) acc or just place the whole £1500 so far into a savings acc paying around 5.3%ish..

It seems obvious to me that as long as I qualify and obey all the rules for the HSBC account, this is the better option surely even though the child account money could be tax beneficial.

any thoughts? :cool: HSBC

KD

erb wrote:

cloud_dog the tax you refer to on a £3000 gift is inheritance tax not income tax and whether this will be chargeable or not depends on the value of the deceased persons estate when they die.

Mmm..i understood that anyone was able to 'give away' each tax year -:

1. gifts of up to £250 to anyone of their choice (also to an unlimited number of people) without the giver/receiver having to incur tax on it.

2. One gift of up to £3000 per tax year, which would not be liable for income or inheritance tax.

(If you gift more than £3K then it could be liable to IHT subject to the deceased's estate, as noted above.)