Childrens accounts and gifts from family

denise38

Can someone please help . My children have been given some money from my uncle who is unlikely to die within the next 7 years. He has taken early retirememnt . They already have Nationwide smart accounts . What are the implications of putting £2,500 into their savings accounts via a cheque from him. Or what would be the best thing to do with the money.

denise38

I was referring to them having to pay tax. I thought that if they had savings and interest amounted to more than £100 per year they would pay tax. I don't really understand it.

Robert_Sterling

If the money is from a parent and the interest on the money exceeds £100 in any financial year then the money will be subject to tax at the highest rate paid by the parent donor.
This is true for each parent.
Where money is given to a child by a person other than a parent
e.g. Friend, relation, God parent, uncle , aunt, etc [ often grandparents ]
there is no limit.

nilocmac

Robert_Sterling wrote:

If the money is from a parent and the interest on the money exceeds £100 in any financial year then the money will be subject to tax at the highest rate paid by the parent donor.
This is true for each parent.
Where money is given to a child by a person other than a parent
e.g. Friend, relation, God parent, uncle , aunt, etc [ often grandparents ]
there is no limit.

Does that mean £100 per parent?

Also say I gave some of the money last year and some this year but the interest goes over £100 this year then do I still have to pay tax?

Bossyboots

nilocmac wrote:

Does that mean £100 per parent?

Also say I gave some of the money last year and some this year but the interest goes over £100 this year then do I still have to pay tax?

I think you do. As I understand it, it is based on the total contribution from parent/s, rather than there being a yearly allowance for this.

ReportInvestor

As with much of the tax system it's a weird law - discriminating against the children of single parents who probably are the most disadvantaged.

But not as weird as the decision to allow CTF savings (which do allow £1,200 pa parental gifts tax free) to morph into ISAs at age 18.

That's just increasing the already massive discrimination in favour of under 5s v 6-17s. But then, who said life was fair?