The Top Easy Access Savings Discussion Area

Mr._H_2

HELS wrote: »

Just been checking my Natwest E-ISA and the interest doesn't make sense. I got £40 more interest in December than in January and haven't made any withdrawls.

How does that not make sense? In case you haven't noticed, interest rates have been dropping every month for five months now. Or is this supposed to be a fixed-rate account? In which case, yes, you have a problem.

murphydavid

HELS wrote: »

Just been checking my Natwest E-ISA and the interest doesn't make sense. I got £40 more interest in December than in January and haven't made any withdrawls. Will be on the phone in the morning but am dreading it, as the staff are so unhelpful and don't appear knowledgeable about internet based accounts. Suggest anyone with these accounts checks them straightaway/

You're not alone in dreading it. They are currently running a television add calling themselves the helpful bank and I cringe every time I see it. I have put them in my diary under the heading never again!

ferrari042

In addition to Wigi's tip on Halifax regular savings don't forget they offer a childrens version at 8% which is tax free. Maximum £100 per month, this was one of Matins top tips a few months ago when it was 10% I opened one for each of my 3 under 15's. Also multiple accounts can be opened for the same child as long as its by different people - mother, father, grandparents etc.

stphnstevey

ferrari042 wrote: »

In addition to Wigi's tip on Halifax regular savings don't forget they offer a childrens version at 8% which is tax free. Maximum £100 per month, this was one of Matins top tips a few months ago when it was 10% I opened one for each of my 3 under 15's. Also multiple accounts can be opened for the same child as long as its by different people - mother, father, grandparents etc.

Thought they could only earn upto £100/yr tax free?

Mr._H_2

stphnstevey wrote: »

Thought they could only earn upto £100/yr tax free?

I'm pretty sure children don't pay tax.

stphnstevey

It depends wether it is their own money or your money

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/ManagingMoney/PlanningYourPersonalFinances/DG_10014128

Do children have to pay tax on savings?

Banks and building societies offer savings accounts just for children. Most adult accounts will usually have 20 per cent tax deducted on the interest before it's paid, which is the case for most savings accounts.
However, children, like adults have a Personal Allowance of £6,035 for the tax year 2008-2009. This is income they can receive tax-free. As long as their annual income (including interest) is below this amount, they'll be able to:

• receive interest without having the tax deducted (parents or guardians fill in a Form R85 for each account)
• claim back any tax they shouldn't have paid (parents or guardians make a separate claim to HM Revenue & Customs (HMRC) using Form R40)

A child can't claim to receive savings interest tax-free if their income is above the personal allowance. But they will be able to reclaim some tax because they have not used the starting rate (10 per cent) limit for savings only (up to £2,320 above the personal allowance).

HOWEVER

Giving money to your children or investing on their behalf

You can give a child or invest on their behalf as much money as you like. But if you're a parent or step-parent and the money you give your child earns more than £100 interest a year, this interest will be taxed as if it were your own.
The £100 limit only applies to parents and step-parents. Grandparents and other adults who give money to children are not liable to pay the tax if the interest exceeds £100 a year.

Mr._H_2

stphnstevey wrote: »

HOWEVER

Giving money to your children or investing on their behalf

You can give a child or invest on their behalf as much money as you like. But if you're a parent or step-parent and the money you give your child earns more than £100 interest a year, this interest will be taxed as if it were your own.
The £100 limit only applies to parents and step-parents. Grandparents and other adults who give money to children are not liable to pay the tax if the interest exceeds £100 a year.

What a ridiculous rule! Surely the main source of money for children is their parents?

Anyway, it's simple enough to avoid this: gift the money to grandparents first, then the grandparents gift the money to the children.

rb10

Mr._H wrote: »

What a ridiculous rule!

It's to stop parents putting their own money into accounts in their childrens' names so that they can get tax-free interest on it. It closes what could otherwise be a very lucrative loophole.

Mr._H_2

rb10 wrote: »

It closes what could otherwise be a very lucrative loophole.

As I pointed out, there are other loopholes still in existence which can be used to achieve the same thing.

surely a better solution would be to have rules concerning children under 18 "gifting" significant sums of money to adults.

[Deleted User]

My children have a Post Office account (I actually seem to think it's run by N.P & L), it pays rubbish and it's only a postal account, which is a real pain. Does anyone have suggestions where the best place to transfer their money to (and there after any Christmas/Birthday money)? They obviously wont need access to it for years, but will add to it 'as and when'.