Tax from children's regular savers

[Deleted User]

i have had a look at

Halifax's Kid's Regular Saver

which offers 6% interest on savings. that's a good deal if i actually start saving £100/mth for my child. however the caveat is that any interest earned by the child that is over £100/year will be taxed at her parent's rate (because these payments are in effect parental gifts)... which makes it a bit pointless as i am a higher-rate taxpayer. i cannot get someone else to pay into my child's account either (to get around this), because it restricts itself to funds only paid in by the child's parent or guardian.

any advice or experience on this?

thanks!

grumbler

I don't understand your maths.
If you pay £100 p.m. the year's interest will be just about £600*6%=£36 that is much less than £100 threshold. After 12 months you start from zero anyway, and £1200 saved gets transferred to some other account.

[Deleted User]

ahh, just re-read the terms of the 6% regular savers account - so it does convert to a normal account with only 3% interest after a year... somehow i had the impression that only the interest gets transferred to another account, while the original amount saved continues to stay in the regular savers account with 6% interest! a bit too good to be true!

notanewuser

Deleted_User wrote: »

ahh, just re-read the terms of the 6% regular savers account - so it does convert to a normal account with only 3% interest after a year... somehow i had the impression that only the interest gets transferred to another account, while the original amount saved continues to stay in the regular savers account with 6% interest! a bit too good to be true!

You can take it all out and then restart the regular saver each year. DD's on her third one now.

AlwaysLearnin

Did you have any issues renewing? They made a real mess of one of ours a couple of months back and we have another maturing next month, so I'm intrigued to know if that was just bad luck or whether we might have to endure the same palaver...

notanewuser

AlwaysLearnin wrote: »

Did you have any issues renewing? They made a real mess of one of ours a couple of months back and we have another maturing next month, so I'm intrigued to know if that was just bad luck or whether we might have to endure the same palaver...

Not really. I have to go to the nearest city to do it because there are no branches nearer, but otherwise it's easy. The last letter re the maturing account said that you could restart it with the same details, standing order etc. You just have to empty the account (they gave me a cheque) and then restart it from zero. I then put the cheque into another children's account with another bank.

AlwaysLearnin

Good to hear.

They sent us a form with prepaid envelope last time, which we returned. No idea what they did, but it wasn't what we wanted/asked for. We had to go in to branch to get it sorted, so may just go in there again this time and miss out the form.

Thanks

jennifernil

The Kids Regular Saver can now be "renewed" by filling in the form they send you about 2 months before maturity.

To "renew" it you have to have another children's account for the funds to be transferred into. You can then move the funds on elsewhere if you wish.

As far as I am aware, anyone can open one of these accounts for the child, I have them for my grandchildren, opened last year and just "renewed" for a further year.