Best Savings or Current Account for 16year old

clingwood

Hi all
Please can anyone give me advice for my daughter she is 16 and in full time education. She has just Inherited some money. Where should put it, I would prefer it to be put away until she is 18 (she may have other ideas) but if I can convince her that if she waits and she gets a good interest rate return she will be able to have an extra pair of shoes in two years!!
Thanks

Lokolo

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

What about something like this?

If she opens it in her name it won't matter as you can't (well you can but its in the small print ) get access to it easily. Assuming she earns under £6475 (personal tax allowance), she can get tax free interest by filling in an R85 form

clingwood

Thanks for the reply she does not go to work at all, but does that mean she will get taxed on her inheritance because it would be over the 7k mark??
Sorry new to all this money talk as my x used to handle all finances!!

Lokolo

clingwood wrote: »

Thanks for the reply she does not go to work at all, but does that mean she will get taxed on her inheritance because it would be over the 7k mark??
Sorry new to all this money talk as my x used to handle all finances!!

Are you talking about the personal allowance? The only thing that effects that is taxable income, which inheritence isn't part of. Just things like bank interest (not the capital), income from a job etc.

http://www.hmrc.gov.uk/incometax/taxable-income.htm

There is a list here.

Loughton_Monkey

clingwood wrote: »

Hi all
Please can anyone give me advice for my daughter she is 16 and in full time education. She has just Inherited some money. Where should put it, I would prefer it to be put away until she is 18 (she may have other ideas) but if I can convince her that if she waits and she gets a good interest rate return she will be able to have an extra pair of shoes in two years!!
Thanks

You don't say how much. If in the order of £5,000, then don't rule out a cash ISA. OK, she can invest tax free outside an ISA (assuming she's a non-earner), but the minute she starts earning properly, she would pay tax on the interest, but if it were in an ISA, it could remain tax free for 'ever'.

Maybe that's optimisic thinking, though, because I wouldn't mind betting she will want to get her hands on it at some stage when 18-ish.

Also, Cash ISA's are not paying much at the moment. Very little different from ordinary savings accounts (2.8%-ish for a year with bonus). Look at this site, also for 1,2,3 etc. year fixed term bonds. Reasonable interest, but she cannot get her hands on it without penalty. Maybe that's a good thing.

Whatever you do, get her to 'buy in' to the decision, and encourage a longer term view. Depending upon amount, possibly agree X% locked away for some years, and Y% in another fund for 'frittering' when the need arises.