Children's savings limits

Runningmummy83

My daughter is turning 16 and various financial institutions are contacting us both re changes to her accounts, permissions, providing ID etc when that happens.

She currently has the following;

High Street bank savings account £10k 2.05% 

Credit union account £2.5k 1.75% 

ISA (child trust fund) £2.5k 3.5%

Building society savings account, regularly funded by grandparents £2.5k 3.5%

My worry is that she is earning more than £100pa from her savings. I know we haven't fully utilised the ISA but these have all been built up over the years with birthday money, regular savings by grandparents £10pm, gifts from deceased relatives, etc there is also a regular DLA payment in her name which is paid in to one of the accounts mentioned above.

My husband and I are normal rate tax payers and have minimal savings ourselves.

The account with the balance of £10k is making her interest of over £200 on its own but I can't understand if that's ok because it's not earned on money given by a parent? Do I need to inform HMRC or take any action to avoid getting a tax bill, particularly if she comes under the radar with HMRC when she gets a part time job in the near future?

Thanks in anticipation

eskbanker

The £100pa rule only applies to money gifted by each parent, so provided it's clear that this isn't breached then there's no need to do anything.

Children have the same personal tax allowances as adults, so keep an eye on whether her employment earnings would take her beyond these....

Eco_Miser

T

eskbanker said:

The £100pa rule only applies to money gifted by each parent, so provided it's clear that this isn't breached then there's no need to do anything.

Children have the same personal tax allowances as adults, so keep an eye on whether her employment earnings would take her beyond these....

Those allowances are £12570 PA PLUS up to £5000 Starting Rate for Savings (reduced if earnings exceed PA) PLUS £1000 PSA.
She would need £20,000 in an account paying 5% or better to even reach the £1000 PSA. The money in the ISA is exempt.

jimjames

Runningmummy83 said:

High Street bank savings account £10k 2.05% 

Definitely one to look at there, she can get at least double that interest with a different account whether inside an ISA or not.

Runningmummy83

Thank you for all your comments and suggestions, appreciate your advice and time clarifying those limits.
Will definitely be moving the bigger balance to a higher interest account 😊