Advice please - Childs saver required

Princess_nola1

Hi,

We've had a letter from Halifax saying that the interest has stopped being paid on our sons account as it was only for 12 months when we took it out. We've now transferred the sum into his other savers account (low interest but no regular savings required).

What would be the best thing to do with this money now? We want to keep it for him, and would like to save a small sum every month, but prefer to be able to add any birthday, Christmas, easter cheques/cash in if possible?

I've tried reading the articles on the main site, but I'm getting so confused! Ah advice would be appreciated.

Thanks
Princess nola

xylophone

Does your child have a CTF/JISA?

If you are saving for your child outside tax privileged accounts like CTF/JISA, be careful of the £100 rule.
http://webarchive.nationalarchives.gov.uk/20121015000000/www.direct.gov.uk/en/MoneyTaxAndBenefits/ManagingMoney/PlanningYourPersonalFinances/DG_10013916

http://www.hmrc.gov.uk/tdsi/children.htm

This rule does not apply to money given by people other than parents inside or outside tax privileged accounts.

For this reason, unless using tax privileged accounts, I feel it is better to keep money given by parents separate from that given by others.

https://www.gov.uk/child-trust-funds/overview

justme111

If it is investment works on accumulating basis rather than paying interest then it should not matter , should it ?

xylophone

If it is investment works on accumulating basis rather than paying interest then it should not matter , should it ?

See http://webarchive.nationalarchives.gov.uk/20121015000000/www.direct.gov.uk/en/MoneyTaxAndBenefits/ManagingMoney/PlanningYourPersonalFinances/DG_10013916
re children's income- this can also arise from a fund paying dividends.

If a parent provided the money and was a higher rate tax payer or was pushed into the higher rate band because of the dividend income, then tax would be due on account of the £100 rule.

This would not prevent the income from belonging solely to the child if the parent had made an absolute gift to him.

Princess_nola1

Ok, I just would like some advice on how to get the most from my sons sons money for him - but I'm getting more confused with each comment!!

notanewuser

You can restart the regular saver once you've taken the money out.

I move DD's into her Virgin (northern rock) child savings account (3%) each year.

Also, the £100 interest applies per parent.

Princess_nola1

Ok, we'll the best regular savers account is Halifax again at 6%, so if we find a good interest rate easy access for his current sum, then transfer at end of 12 months Halifax?

xylophone

Also, the £100 interest applies per parent.

This is made clear in links in post 2 above.

notanewuser

xylophone wrote: »

This is made clear in links in post 2 above.

I thought it worth stating for others who may not click the links.

moorg86

Just a little point that we have realised.. the 6% interest rate is the total interest paid divided into 12 lots of interest.. to make it clearer you get 0.5% interest on the first £100 you save, then 0.5% interest on £200, 0.5% on £300 and so on, so if you save the maximum amount each month over the 12 months the amount of interest you will be paid is £40 (there or thereabouts)
£40 on £1200 doesn't seem that much to me, or am I wrong?!

Princess_nola1

According to Martins article it is? Might be wrong.