£100 rule for children's interest on savings

scooter71

Hi

If I understand correctly, children can earn interest on savings given by their parents tax free up to £100 per parent per year.

I have 2 kids, does this mean EACH child can earn up to £200/year in interest before being taxed on money given to them by my wife and I?

I phoned HMRC to ask and they weren't sure. They are going to call me back next week. I also phoned Which? money who said that they thought the the £100/per parent would be split across each child i.e. in my case this would be £100/child and £200 total before tax is due.

Does anyone know if this is correct? I was hoping that I could get them £200 tax free each!

Thank you in advance for any replies

jimjames

I thought it was £100 per parent and no reference to number of children.

If you use a JISA then it wouldn't matter but to get that amount of interest at current rates you'd have to have a fair amount of cash that could be put in an ISA (JISA or otherwise).

xylophone

http://uk.virginmoney.com/virgin/savings/learn/childrens-accounts/Tax


"Most children don’t pay tax, so the interest they receive on any savings will be tax-free.

There are special rules in place with HMRC if the savings have been given by a parent. If gifts from a parent produce more than £100 gross income a year, the whole of the income from the gift is normally taxed as the parent’s income and a child cannot get back any tax on that income. Nor can interest paying accounts be registered to have interest paid without tax taken off. The £100 rule applies separately to each parent. The £100 rule applies to income earned each year and it does not matter whether the fund is comprised of part capital and part added interest. The £100 rule applies as long as income is over £100 in any one year for any one child from one parent."

http://webarchive.nationalarchives.gov.uk/+/http://www.hmrc.gov.uk/families/babsi.htm