Best way to save for a child

RickyC_IFSWP

joninstjohn wrote: »

Although it is a fairly trivial amount, one thing I have done for my daughter is open a Co-op bank Bonus Saver and stuck £50 in it. The interest rate is paltry at 0.2% but every year they give her £2 up to the age of 12 so that's 4.2%. Between the ages 13-18 they pay a £10 bonus per year that's a whopping 20.2% return as long as you keep the minimum £50 in the account.

Other things I do, she has a child trust fund with family investments, a tax-free with-profits endowment with Sheffield Friendly, a UK tracker pension with Virgin (she's 4) and £1200 in Funding Circle which is returning 7.4%. Her slush money is kept in Lloyds who are paying a reasonable (for the times) 3%.

She's got it allllll sorted! :cool:

travis32

I would also suggest you to use ISA which is tax free, and save money for your child name.

Speculator

xylophone wrote: »

The rule is that if the interest arising from a parental gift is over £100, then all that income will be taxed on the parent at the parent's highest marginal rate.

http://www.money.co.uk/article/1007483-gifting-money-to-your-children-faqs.htm

In one way, it would seem logical to say that if a parent had made a gift to a child which produced gross income of over £100 (so that the whole was taxed on the parent), but that parent's income (including the income arising on the child's account), was within that parent's tax free allowance, then to the extent that the parent could complete R85 for her own accounts, she could do so for the child.

http://www.hmrc.gov.uk/taxon/bank.htm

But it would seem that HMRC might not be content with this - see for example http://webarchive.nationalarchives.gov.uk/+/http://www.hmrc.gov.uk/individuals/savings-income.htm

I can find nothing on the HMRC web site which covers this situation so you would need to raise the query with HMRC.

I've just spoken to them but he didn't know the answer and had to call technical help. He came back after 3 mins and said as long as the parent is a non taxpayer (earning less than £10,000) you can keep the R85 on the childrens account even if the child is earning over £100 in interest!

I might write to them to get written confirmation.

xylophone

I might write to them to get written confirmation.

A good idea - we have a sheaf of letters etc relating to family trusts....

lennyaitken

I think you can start a saving account with a minimum balance but you should do this asap. One thing you need to know is your child’s college saving account is not the most important account to fill. Easy way to establish this is to pay every month just like you pay any other bill every month. And its best if you have the accounts under your names until your child comes to a reasonable age.