Age for £1000 tax-free savings allowance?

lucyandthomas

Hi

My daughter will turn 16 soon. At what age will she become eligible for £1000 tax-free interest on savings?


At present, if she earns interest over £200 (£100 for each parent), that will be taxable if it takes us over our personal £1000 savings allowances. Just wondering when she'll get her own £1000 allowance.

Many thanks

Dazed_and_confused

Eligible now. Age is irrelevant.

But it is a 0% tax rate not an "allowance" and she almost certainly cannot benefit from it.

You have to have income of £17,500 before the savings nil rate (known as the Personal Savings Allowance) is available to be used.

The savings starter rate where upto £5,000 of savings interest is taxed at 0% comes first.

And the Personal Allowance of £12,500 comes before that.

All figures are for the forthcoming 2019:20 tax year

lucyandthomas

She has a Saturday job, earning very little. Earns under £200 per year in interest on savings. The majority of these savings have been given to her over the years by us (her parents), other relatives or earned herself (she has a JISA too).

Does this mean she could save more - and therefore earn more interest on her savings - without being taxed on it (or it affecting our personal savings allowances)?

Apologies if I am being thick!

anselld

The £100 interest limit only applies to the interest on gifts from parents. It does not apply to gifts from other relatives or savings from her own earned income.

Dazed_and_confused

She gets a Personal Allowance so she can have taxable income of £12,500 before any tax would be payable.

After that she can have upto £5,000 of savings interest which would be taxed at 0%

The £5,000 is gradually reduced to £0 if she earns over £12,500 (once she gets to £17,500 earnings she would lose the savings starter rate altogether).

But then the savings nil rate applies, upto £1,000 interest taxed at 0%.

xylophone

Age is irrelevant.

But not to the "£100 rule".

This is pre PSA and interest being paid gross but the principle still applies.https://webarchive.nationalarchives.gov.uk/20121003064215/http://www.direct.gov.uk/en/MoneyTaxAndBenefits/ManagingMoney/PlanningYourPersonalFinances/DG_10013916

londoninvestor

Dazed_and_confused wrote: »

Eligible now. Age is irrelevant.

But it is a 0% tax rate not an "allowance" and she almost certainly cannot benefit from it.

You have to have income of £17,500 before the savings nil rate (known as the Personal Savings Allowance) is available to be used.

The savings starter rate where upto £5,000 of savings interest is taxed at 0% comes first.

And the Personal Allowance of £12,500 comes before that.

All figures are for the forthcoming 2019:20 tax year

That applies to all income deemed to be her own (earnings from a job, interest on any money other than gifts from her parents, and interest on money given by each parent if it's under £100), and as you say it applies from birth.

However, as xylophone says, if the interest on money given by each parent exceeds £100, it's deemed not to be hers but the parent's - and that's until she is 18.