Savings for kids over how to claim back tax over £100 interest

minority

Hi,

Just trying to find out some information on child saving taxation.

My child has near £6000 split between 3 accounts, two in my name and 1 in my partners.

Held in my name is about £1250 in a 3.25% interest account and 2155 in a 3% account (easy access).

Held in my partner name is £2500 in 4.25% account.

If i understand what I have read the £100 rule is not for the whole amount but for the amount held in each parents name.

The amount in my name is now going to exceed £100 a year and as I understand it will get taxed at 40% since I earn over £41000.

Now my question is!

Most if not 99% of this money has come from grandparents and great Granddad. Is it possible to tell taxman this and get the tax removed from my child money?

my only other idea is to pop it in a cash isa for her but I don't want to lock it away in her name for fear when she gets access to it she blows the lot....Also if I have another child I cant decide whether the money should be split, but that a debate for another day.

I am also considering opening a stock and share ISA in my own name for this reason but that an up hill battle since I work in finance sector and need to get permission every time i plan to buy new shares or enter a new fund.

kidmugsy

The £100 p.a. rule applies only if a parent supplied the capital. If it came from, say, Grandma then a child can get tax-free interest up the the Personal Allowance for income tax.

xylophone

my only other idea is to pop it in a cash isa for her but I don't want to lock it away in her name for fear when she gets access to it she blows the lot...

The money belongs to the child and can only be held in bare trust until she is 18 (16 in Scotland) - at that point she has the right to both income and capital.

The child can only have a JISA (at the moment) if eligible - that is to say if born before 1 Sep 2002 or after 2 Jan 2011. https://www.gov.uk/child-trust-funds/overview

You might find this worth a read http://uk.virginmoney.com/virgin/savings/learn/childrens-accounts/

Tax is reclaimed on R40 http://www.hmrc.gov.uk/forms/r40notes.pdf

In the circumstances you describe, you should complete R85 for the accounts? http://www.hmrc.gov.uk/helpsheets/r85-helpsheet.PDF
http://www.hmrc.gov.uk/forms/r85.pdf

Keep a careful note of the source of the funds.

minority

Thanks for the replies.

Yeah I am going to fill in R85. So are you saying an R40 will reclaim the lost interest.

Hmm not sure how I prove it as the money has accumulated from her birth, birthdays and xmas etc (She is 2) and I am guessing it up to me to prove that the money has not came from us.

Just for the record obviously I/partner have paid the money into the accounts as it was cash based gift so we have no receipt etc of who gave what.

I could hazard a guess and say most of it came from Great Granddad but I wouldn't be able to put a hard number down.

Ow well cheers for the info

kidmugsy

minority wrote: »

I could hazard a guess and say most of it came from Great Granddad but I wouldn't be able to put a hard number down.

In future, photocopy Great Grandad's cheques and Birthday/Christmas cards. We live and learn.