We'd like to remind Forumites to please avoid political debate on the Forum... Read More »
We're aware that some users are experiencing technical issues which the team are working to resolve. See the Community Noticeboard for more info. Thank you for your patience.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
Saving for grandchildren
Options

lesthefizz
Posts: 3 Newbie

Hi, we have 6 grandchildren and as each one was born my wife started a Halifax savings account for them with a £20 per month direct debit. Roll forward a few years and, between the 6 accounts there is about £20k. Halifax notify the Tax of interest earned by my wife but include the interest on the £20k which puts her over her £1000 interest allowance and she receives a tax bill each year for about £160. Her only other income is state pension. Is she liable for the interest tax on these 6 accounts. (The eldest has £5k in hers). Many thanks.
0
Comments
-
Are the accounts specifically children's savings accounts and were they opened in the child's name(s) ? (Hint - if you're not sure, she would have needed proof of ID (usually a birth certificate) in order to do that)
If so then, as a grandparent, she shouldn't be liable for any tax on the interest earned from those accounts - it's only the parent that would be potentially liable for interest earned from any money they've paid in (the £100 interest per parent rule) or the child themselves (in the unlikely event that they exceeded their own PSA).
If the accounts were opened in your wife's name, then they'll be treated just like her other, own accounts with regards to any tax liability.2 -
Tax on savings interest: How much tax you pay - GOV.UK
The £1000 PSA allowance is after the £5000 starter allowance...
So a call to HMRC may be in order if her only taxable income (other than from savings) is the State Pension?
£20k at 10% is only £2k pa... but having other substantial savings in her name (or jointly with you) could potentially mean that some tax is due in total.1 -
They are in the children’s names. This was confirmed lately when Halifax let us know that because eldest is coming up to 16, she will take over ‘control’ of her account.0
-
‘£20k at 10% is only £2k pa... but having other substantial savings in her name (or jointly with you) could potentially mean that some tax is due in total.’
Thank you for responding, yes, she has non ISA savings with near £1000 interest income and the interest from the kids accounts pushes her over into being taxed.0 -
As the accounts are in the children's names, the interest is taxable on them (and way below the £18,570 they can get before paying tax). As her only non-savings, non-dividend income is her state pension, she can have (£18,570 - state pension) of interest before paying tax. The £18,570 is Personal Allowance £12,570 plus Starter Rate for Savings £5000 plus Personal Savings Allowance £1000.Eco Miser
Saving money for well over half a century1 -
So a call to HMRC may be in order if her only taxable income (other than from savings) is the State Pension?
It is quite possible for the state pension to be high enough to exceed the Personal Allowance.
1
Confirm your email address to Create Threads and Reply

Categories
- All Categories
- 351K Banking & Borrowing
- 253.1K Reduce Debt & Boost Income
- 453.6K Spending & Discounts
- 244K Work, Benefits & Business
- 599K Mortgages, Homes & Bills
- 176.9K Life & Family
- 257.4K Travel & Transport
- 1.5M Hobbies & Leisure
- 16.1K Discuss & Feedback
- 37.6K Read-Only Boards