How to figure out tax responsibility of Child's account with mixed sources

HJones22

So it has only recently (via the weekly MSE email) come to my attention that I may owe money on my Child's Savings Account interest. 

Child is almost 6, we opened an account shortly after his birth to put in the kind gifts from family members, and shortly after then we have also opened a regular savings account that myself and my husband pay £100 per month into. When this pays out annually, I have moved this into my son's general savings account. In the following years, I did open a second general savings account as it had a better rate of interest, and for the most part, most of the money has remained in one account with a higher interest rate, but some has remained in the lower paying account due to maximum balance restrictions for the better rate. 

So at the moment he has two savings accounts and an ongoing regular savings account. In the 23/24 tax year he earned over £200 in interest (2 parent joint account so adding the two £100 allowances together for this), so this is the first year I think we may now have to check if we owe tax. 

So I am assuming that I now have to forensically examine all previous incoming payments and divide up the resulting interest into "Parents" and "Others" over the past 6years. Please tell me there is an easier way to do this - because I am loosing the will trying to divide up monthly payments of under £3.00.

Dazed_and_C0nfused

HJones22 said:

So it has only recently (via the weekly MSE email) come to my attention that I may owe money on my Child's Savings Account interest. 

Child is almost 6, we opened an account shortly after his birth to put in the kind gifts from family members, and shortly after then we have also opened a regular savings account that myself and my husband pay £100 per month into. When this pays out annually, I have moved this into my son's general savings account. In the following years, I did open a second general savings account as it had a better rate of interest, and for the most part, most of the money has remained in one account with a higher interest rate, but some has remained in the lower paying account due to maximum balance restrictions for the better rate. 

So at the moment he has two savings accounts and an ongoing regular savings account. In the 23/24 tax year he earned over £200 in interest (2 parent joint account so adding the two £100 allowances together for this), so this is the first year I think we may now have to check if we owe tax. 

So I am assuming that I now have to forensically examine all previous incoming payments and divide up the resulting interest into "Parents" and "Others" over the past 6years. Please tell me there is an easier way to do this - because I am loosing the will trying to divide up monthly payments of under £3.00.

Have you already established that there will be tax to pay on this income?

masonic

Do you know roughly what proportion is parental vs others? If it's 90+% parental contributions, then the difference in tax might be so small it isn't worth trying to deduct interest on the other contributions.

Kim_13

I can’t imagine there is a tax liability on any interest before 22/23 at the earliest and probably just 23/24 if any - rates were lower and the accrued sum lower too when he was younger.

Work out where he is for 24/25 against what is a de facto £200 PSA and consider a JISA as there would then be no tax due and no need to apportion monies in this way.

xylophone

https://webarchive.nationalarchives.gov.uk/ukgwa/+/http://www.hmrc.gov.uk/families/babsi.htm

The above is pre all interest being paid gross but is a clear statement of the £100 rule which still applies to parental gifts to their unmarried minor children.

Why not move parental gifts to a JISA (to which the £100 rule does not apply) ? 

https://www.gov.uk/junior-individual-savings-accounts