Effective savings for my child

DaftMule

I've read some of the main threads on here about childrens savings accounts and quite frankly it seems a total minefield to me.

Seems I can't put more than about £1850 into the top payer savings account for my child without tax being charged on the interest. If I put in £100 a month that's less than 2 years! Not sure if the compound interest earned counts toward that too in which case it's even shorter! What are you meant to do...accept that once the account gets £1900 in it, it's a dead duck and you need to move that money into another account, trying to do it in your childs name??

ReportInvestor

There's no point moving the money. The rules apply to all the child's savings.

The best approach is probably to involve relatives.

Aunts, uncles and grandparents all have an annual £3K tax free gift allowance. And each child has its own annual £5K income tax free personal allowance.

Why not get them to give cash [in the form of a cheque] at birthdays and Christmas while you give the toys & presents? [Keeping a careful record of all the cash transactions in case the Revenue comes calling in future.]

One grandparent in my family gives £15pm via Standing Order direct to the child's account - which leaves no room for doubt.

The whole arrangement seems to me perverse. It discriminates between children and against single mothers without much in the way of extended families.

It's bizarre that one child could pay 40% income tax on £2K of savings while another pays diddly squat on £100K of savings. I'd like to see a taxman explain that to a child and get away with it :rolleyes:.