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£100 interest limit on kids savings before it's all taxed as if it were the parents
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pip895 said:artyboy said:Restrictive? You know the child could have been 'given' the money by grandparents, friends, neighbours, Jim from down the pub etc etc... it really doesn't take a massive leap of imagination to ensure there is no paper trail back to the parents and hence no tax issues to deal with
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pip895 said:artyboy said:Restrictive? You know the child could have been 'given' the money by grandparents, friends, neighbours, Jim from down the pub etc etc... it really doesn't take a massive leap of imagination to ensure there is no paper trail back to the parents and hence no tax issues to deal with
I'm not getting taxed on any of that interest as a parent... it's my kids money, nothing to do with me beyond where my name has to be on the account as the responsible adult.2 -
No.
surely you get taxed regardless of who gave them the money??
The "£100 rule" applies to income arising on gifts (except to tax privileged accounts like JISA) from parents to their minor unmarried children.
This is why it is always wise for gifts from other people to be kept separate from those from parents (except into JISA where it doesn't matter)
https://www.gov.uk/hmrc-internal-manuals/savings-and-investment-manual/saim2430
https://www.gov.uk/hmrc-internal-manuals/trusts-settlements-and-estates-manual/tsem4310
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xylophone said:No.
surely you get taxed regardless of who gave them the money??
The "£100 rule" applies to income arising on gifts (except to tax privileged accounts like JISA) from parents to their minor unmarried children.
This is why it is always wise for gifts from other people to be kept separate from those from parents (except into JISA where it doesn't matter)
https://www.gov.uk/hmrc-internal-manuals/savings-and-investment-manual/saim2430
https://www.gov.uk/hmrc-internal-manuals/trusts-settlements-and-estates-manual/tsem43100 -
Apologies for resurrecting an old thread. Regarding the £100 interest limit and the gov.uk website: "Tell HMRC if, in the tax year, the child gets more than £100 in interest from money given by a parent".It's a hypothetical situation but I just wanted to understand for clarity. As a basic rate tax payer, putting £3000 in my child's 4% savings account in tax year 2024-25 has yielded £120 interest (i.e. £20 over the savings interest threshold for taxation). The whole £120 will be taxed at 20% and will need to be declared. As a non-tax payer, my wife has done the same in this tax year at the same rate of interest. As I understand, there is likely to be no tax payable for my wife's donation but there will be for the money I donated in the previous year and which will be taxed in this tax year. If my child withdraws, say, £200 from his account, would it be from my £3K donation or my wife's? In other words, in a total savings of £5800, would interest still be 4% on £3000 or is it now 4% on £2800. From whose donation has my son taken his £200? It's all a bit complicated for me and would be even more so if you were to include donations from grandparents and friends in the mix in order to calculate the tax owed specifically on my donated amount. I'm really curious to know how HMRC would calculate this when it's been declared or even if it should be declared if the amount withdrawn by my son takes the interest yielded from my donated amount under the £100 threshold.I suppose the obvious answer is to withdraw my £3K, pass it to my wife and get her to donate the money from her bank account to my son so that the whole amount has now been donated by a non-tax payer. It still leaves me intrigued as to how HMRC would treat the scenario above.0
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lotti_bosman said:I suppose the obvious answer is to withdraw my £3K, pass it to my wife and get her to donate the money from her bank account to my son so that the whole amount has now been donated by a non-tax payer. It still leaves me intrigued as to how HMRC would treat the scenario above.1
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IanManc said:lotti_bosman said:I suppose the obvious answer is to withdraw my £3K, pass it to my wife and get her to donate the money from her bank account to my son so that the whole amount has now been donated by a non-tax payer. It still leaves me intrigued as to how HMRC would treat the scenario above.
Whether this action would resolve the (frankly unenforceable) £100-per parent tax rule is another matter, though !1 -
I queried this with Newcastle BS. They told me that there was some special way the account was set up & administered that parents wouldn't be subject to tax.
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IanManc said:lotti_bosman said:refluxer said:IanManc said:lotti_bosman said:I suppose the obvious answer is to withdraw my £3K, pass it to my wife and get her to donate the money from her bank account to my son so that the whole amount has now been donated by a non-tax payer. It still leaves me intrigued as to how HMRC would treat the scenario above.
Whether this action would resolve the (frankly unenforceable) £100-per parent tax rule is another matter, though !
If it had kept up with inflation since I was born the limit would now be £1800.I'm sure you know this, but for the benefit of others reading, it is interest of £100 on the sum given, £100 is not the limit a parent can gift before tax is payable on the interest. So the sum given can be substantially more than £100.lotti_bosman said:I have to agree with the "frankly unenforceable" bit. It would be an utter minefield to enforce and needlessly costly in most cases I'd expect. I'm genuinely intrigued to know how many people who should declare it to HMRC, actually do. And of those who don't and should, how many actually get chased up by HMRC. I'd suspect not that many.2 -
I'm sure you know this, but for the benefit of others reading, it is interest of £100 on the sum given, £100 is not the limit a parent can gift before tax is payable on the interest. So the sum given can be substantially more than £100.
Thank you for pointing it out so gently.1
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