Halifax Childrens Regular Saver

System

Yes i am in my second year at 10% too.

Bisoy

I/we are in our second year and it's 10% as well.

Bisoy

Cypher wrote:

My interpretation was you could gift money to a child each year and only when the gift would cause the child to earn £100 in interest do you have to pay tax on it. I also thing this is per child. So by you and your wife both paying £100 per month to each child, I don't think tax would be an issue. As each child off each parent would only earn around £60 per year in tax.

It is still does sound very complicated to me. If me and my wife put in £100 monthly then on it's anniversary each child would have £2400 and that's way over the £100 mark allowable tax free allowance. Also we register tax gross on their YBS account. So would that mean that we will be way over £100 tax free allowance?

I am very confused. What I want is to save for our children within the limits allowed by law. We are not in any way trying to avoid paying tax.

Hope someone in the MSE community would elaborate this further. Many thanks.

Exceller8

It is still does sound very complicated to me. If me and my wife put in £100 monthly then on it's anniversary each child would have £2400 and that's way over the £100 mark allowable tax free allowance. Also we register tax gross on their YBS account. So would that mean that we will be way over £100 tax free allowance?

I am very confused. What I want is to save for our children within the limits allowed by law. We are not in any way trying to avoid paying tax.

Hope someone in the MSE community would elaborate this further. Many thanks.

Hi Bisoy if you follow this link it should explain things a little better. I hope this helps you out. XLR8 http://www.hmrc.gov.uk/taxback/example42.htm

Cypher

Bisoy wrote:

It is still does sound very complicated to me. If me and my wife put in £100 monthly then on it's anniversary each child would have £2400 and that's way over the £100 mark allowable tax free allowance. Also we register tax gross on their YBS account. So would that mean that we will be way over £100 tax free allowance?

Each Child would have £2400 but only £1200 would have come from any one parent. £1200 drip fed at £100 per month would only pay approx £60 per annum interest in the 10% regular saver account. So you are well inside of the £100 interest per parent rule.

The rule says interest gained from gifts in any year. As you give them £1200 per year, I read it as, only the interest from that year thats taxed. In which case you shouldn't be paying tax

Can anyone clarify if interest earned from previous years parental gifts counts towards the £100 rule?

regularsaver1

I think the only problem you would have with this is that the names on the childrens regular saver are supposed to match the names on the save4it (the nominated account where the funds go to after the year and must be open before opening the regular saver)

(unless they have now changed the rules)

Exceller8

Originally posted by Bisoy

So I hope my understanding is right, that if I contribute £100 each for my son and daughter monthly and same as my wife doing same £100 each of them then we will pass the allowable £100 tax free interest for each parent, right? Since that will give me roughly £60 for my son and £60 for my daughter and would be same for my wife. Have I got it right? then....

It looks to me that you are correct in your understanding of this.
http://www.hmrc.gov.uk/taxback/100pound.htm

I just wondered if you were paying into the YBS acc for your children as you will also have to take the interest earned onto account to remain under the £100 max interest per parent per child per year.

what you also must take into account is any interest earned from money given by parents from the previous year will also earn interest this year.

Exceller8

Originally postred by Cypher

Can anyone clarify if interest earned from previous years parental gifts counts towards the £100 rule?

Follow this link http://www.hmrc.gov.uk/families/babsi.htm
and read the example at the end of the page hope this clarifies things/or helps in some way good luck XLR8:xmassmile

1jim

It seems to me the only sensible way to avoid this is to get a relative to save for each child....thus avoiding all tax liability by the parents

Cypher

If a parent gives a child £2,000 which earns £98 interest the interest belongs to the child for tax purposes and the account can be registered for gross interest. But if the £98 is added to the account, leading to £101 interest being earned in year 2, the interest has now exceeded the £100 limit. This means it now belongs to the parent for tax purposes and the account cannot remain registered gross. If the account holder asks they should be told to cancel the registration.

Thanks Exceller8 thats not good news at all.


How stingey is this government, allowing £100 interest per year would make much more sense and encourage parent to put by for their children. :mad:

As 1Jim says get someone else to donate the money to your children and you donate to theirs Sod the taxman.