Who pays tax on child’s investment interest?

pollynrory

I’m looking to put some money into NS&I green saver for my grand children. The interest will be taxable but who pays? I know that children too have a personal tax allowance so the interest involved wouldn’t be enough to be a problem if it was deemed to be theirs.

If it’s me is there another way to save for them which avoids this and uses their own tax allowance?

Albermarle

Presume you really mean savings interest ( not investment which normally means risk based investments)?
If the account is in your name, your are liable for any tax on the interest . There are some allowances where you can earn some tax free though Tax-free savings: check if you're eligible - Money Saving Expert

If it is in the childs name they are liable. Also they will get full access to the money at 18. I do not think you can buy the green saver for a child. You would probably be better off with children's savings accounts/ A Junior cash ISA/ A JUnior stocks and shares ISA
Top children's savings accounts: 5% interest - MoneySavingExpert

MX5huggy

Do you mean the NS&I green bond? 

https://www.moneysavingexpert.com/savings/green-savings-bond/

These are only available for 16+ years old presuming the children are under 16 then the money would be invested in your name and therefore it’s yours for tax purposes even if you intend to give them the money. 

Junior ISA is the obvious investment wrapper for giving money to children. With the obvious downside that they get full control at 18.

xylophone

If you give money to your grandchild and it is deposited in an account in his /her own name, the tax liability is the child's.

Just like an adult, a child may benefit from personal allowance/starter rate for savings/personal savings allowance so that the child would need to have been gifted a fair sized sum before being liable for any tax!


If a JISA is used, then any interest arising within the account will be tax free.

https://www.gov.uk/savings-for-children

dunstonh

Only money given by a parent has a restriction on it (£100 of interest is allowed - with the excess being classified under the parent).  Money given by grandparents doesn't suffer the £100 limit.