FSCS for Children

nh777

If a minor has a bank account in their name but managed by a parent does the child account receive the same £85k protection as the parent. For example if parent has £150k
in a savings account and moves 50% to the child savings account, is the full £150k still protected. Is there anything untoward / illegal about moving funds in this way.
In this example the 2nd parent has already exhausted theie £85k protection. Hence the choice is either move to child account or move to a new bank which would prefer not to do.

Linton

If you move the money to the child's account does it not then become the child's? This may be important if say the parent dies.  Is that what is wanted?

Do you (sorry, the parents) really need £150K+ in cash losing value to inflation every day?

nh777

These are other factors of course, but I was looking first for an answer to my first question before considering other factors.

wmb194

The account belongs to the child so yes, it will get its individual allowance and protection per financial institution banking licence. Given children can have accounts without parents or anyone else being trustees it intuitively makes sense. Also, the MSE guide states the same: “This applies to everyone, no matter their age (including children), or where they live.“
https://www.moneysavingexpert.com/savings/safe-savings/

Albermarle

Are you aware of this issue?

As HMRC does not count cash gifts as ‘income’, there is no limit to the amount of money you can gift to your child each year.

However, if they are under the age of 18, there is a limit to the amount of interest a child can earn on the money that you gift to them. This is to prevent parents from using their child’s tax-free allowance to avoid paying income tax on their own money.

Children can earn up to £100 in interest on any money given to them by a parent without paying any tax. Anything over £100 will be taxed as if it were the parent’s income.

xylophone

However, if they are under the age of 18, there is a limit to the amount of interest a child can earn on the money that you gift to them. 

Not precisely accurate - see  https://www.cii.co.uk/learning-index/articles/investing-for-children-part-2/57447

However, when parents make gifts for the benefit of their own minor unmarried children, not in a civil partnership, greater care is needed in finding a tax-effective solution given the anti-avoidance rules that exist (where income generated from parental gifts to a minor unmarried child not in a civil partnership, on all gifts from the same parent, exceeds £100 gross in a tax year it will be assessed to income tax on the donor parent– the so-called “£100 rule”).

The amount of interest the child can earn is not limited - the limit is on how much can be earned without its being taxable on the donor parent.

Albermarle

I copied and pasted it from a website . You are correct the wording could have been better.