So confused over £100 rule

boogan

Hello,

Apologies if I'm not posting this in the right place or if this has been answered elsewhere. I tried searching and couldn't find it!

The £100 rule is really confusing me. I have just opened Halifax's 12 month kid's savings account at 6% with a £50 cheque from my uncle. Since for the account you need to pay between £10 and £100 to keep it open, I've got a direct debit set up of £20 a month. Would like to do more, but not possible at the moment. So, there's no way we are ever going to reach the £100 interest this tax year.

However, and here's where I get confused, once my maternity is over next year I can potentially pay in much more (into another account as this one would have matured by then) and here's my question. Is the amount a parent can gift to a child accumulative over the years, or by tax year? I know the £100 interest is yearly, but what about the gifts. If I give my daughter £2000 in 2013-2014, will it count for 2014-2015, etc. Or do you start from zero every tax year?

And also very confusing. Once the account (the Halifax one) matures and the money is transferred to another kid's account, does it count as my daughter's? Does it count as mine and my uncle's forever? When does the money actually become hers?

Thank you in advance and do let me know if I haven't explained myself!

westy22

There is no gift tax in the UK so you can give as much as you want, whenever you want.

The £100 rule is for interest earned only on money given by a parent and is per parent so potentially £200 per tax year for a couple (whether married, divorced or separated).

The money is your daughter's as soon as it lands in her account - your name is on the account just as a Trustee to administer the account whilst she is still a minor. At 18 (or even earlier if the account allows) she can administer the account herself

xylophone

http://bank.virginmoney.com/savings/find/little_rock_access_account_issue_2/things-to-remember/
http://www.hmrc.gov.uk/tdsi/children.htm

The money and interest belong to the child but if the capital has been provided by parent(s), if the interest exceeds the permitted amount, it will be taxed as interest earned by the parent(s).

Does your child have a CTF or JISA? The interest earned on this is not subject to the £100 rule even if the capital has been provided by parents.http://www.hmrc.gov.uk/tdsi/children.htm

boogan

Hello both and thank you for your replies!

I think I'll wait for the Halifax kids savings account to mature and then transfer to a junior ISA.

Does anyone know if I can still have an ISA open in the UK if I move abroad? It's quite likely we'll be moving in the medium term and I worry about locking money away for so long. I don't think she'll be able to get the money until she's 18 if I'm right.

Thank you!

xylophone

http://www.which.co.uk/money/savings-and-investments/guides/child-trust-funds-explained/child-trust-fund-questions-answered/
Check on whether your child is eligible for the JISA or the CTF.https://www.gov.uk/child-trust-funds/overviewhttps://www.gov.uk/junior-individual-savings-accounts/adding-money-to-an-account