Child's savings passing through parents' account

Larches

I have a feeling this might be a daft question but I'll ask it anyway.

My young daughter has a savings account of which I am a trustee, and whilst some of the funds in there are from me, most have come from other family or friends, either directly into the account or via my account. I understand that any interest she gets from cash from other people is not taxable, but if she were to get more than £100 interest in the year from funds I've given (maybe unlikely, with rates as low as they are!), then it would come off my own personal savings allowance and be potentially taxable. What concerns me a little is that relatives etc tend to give cash for birthdays etc, and because we don't live near a branch I usually end up using the cash and just doing an online transfer of the equivalent amount from my account to hers. I do however try (assuming I remember!) to log who the cash has come from, so I'm hoping that means I won't fall foul of the interest rules. If anyone has information to the contrary, I would be grateful to know about it!

My question is around transferring her funds to a different account (still in her name). It looks like the only way I can transfer her money to a new account (for a better rate) is to withdraw her existing funds into MY account, and then send a payment to her new account from there (i.e. no option to make a direct transfer between her two accounts). Based on the logic above, I'm hoping that won't complicate matters when it comes to the tax liability aspect, because it has passed through a parent's account, but does anyone know if that is sound reasoning on my part (or just wishful thinking)?

lr1277

Is the savings account with a bank or building society? Are not able to get a bankers or building society draft in your daughter’s name? You can pay that draft into the new account. When I have taken money out of a building society account, I have been given a cheque in my name. The building society also did a faster payment to my account (obviously a transfer under the £10k limit).

wmb194

It's the source of the funds that matters, not how it transitions from one account to another. As you say you are doing, as long as you keep track of its origin I wouldn't worry. I've had the same issues as you with moving money between children's accounts with different institutions but felt that withdrawing and depositing in cash, whilst possible, was an unnecessary risk that a trustee shouldn't take.
https://www.gov.uk/savings-for-children

Reaper

I have encountered a similar problem when adding more money. Some companies accept money only from a single linked account which is annoying when grand parents etc want to donate a birthday gift.

When all else fails I ask the doner to give the money to me along with a covering letter letter saying the money is to be passed on to the child. Then I keep a record of the date and amounts in and out.

I don't know if that is legally watertight but it's the best I can do.

Larches

Thanks all. I'll keep on logging. Some accounts (including this one, as I understand it) are indeed restricted in the withdrawal options they offer. The provider (building society) in question has suggested withdrawing the funds to my account and then I can either send an electronic payment or write a cheque in my daughter's name to send to the other account. I'll do the former rather than having to dust off my chequebook and have the money sat around in my account whilst I wait for the postal service & cheque processing.