Best place for a child saving account

blowzy

I have read the MSE article, but all the accounts are flawed.
I want an account which my child can only touch when they are 18 without eating into the isa allowance while also allowing me to touch this money for big purchases (eg a car). Nationwide flex cannot be an option as he already has an account for pocket money. All isas are off the table alongside any account that is not easy to setup (I don't want to have to drive to kent to setup a bank account). Ideally online setup but I will settle to setup in branch in they are on the high street. 

Nationwide's Children's Future Saver is exactly what I am looking for, but they have recently cut interest rates to a subpar low of 3.05% (previously 3.55% which was still not great). A bonus would be allowing the child to see the money with their own app, but I'm not that fussed.

Keep_pedalling

Are you aware that any child’s account you fund, other than an ISA will leave you with an income tax liability if it earns more than £100 in interest?

xylophone

Are you aware that any child’s account you fund, other than an ISA will leave you with an income tax liability if it earns more than £100 in interest?

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

Children are entitled to income tax allowances in the same way as adults. And, depending on their income, they may or may not be taxpayers. 

Be careful. There are special rules if the savings have been given by a parent. If gifts from a parent produce more than £100 gross income a year, the whole of the income from the gifts is normally taxed as that parent's income. A child cannot get back any tax on that income. 

The £100 rule applies separately to each parent

The £100 rule applies to income arising each year. It does not matter whether the money in the account is comprised of part capital and part added interest. The £100 rule applies as long as income is over £100 in any one year for any one child from one parent.

For example

If a parent gives a child £2,000 which earns £98 interest the interest belongs to the child for tax purposes But if the £98 is added to the account, leading to £101 interest being earned in year 2, the interest has now exceeded the £100 limit. This means it now belongs to the parent for tax purposes

Note the "for tax purposes"

The interest belongs to the child beneficially in either case. It is just that where the £100 Rule bites, the parent is responsible for paying the tax arising on income from his/her gift.

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

 Tell HMRC if, in the tax year, the child gets more than £100 in interest from money given by a parent. The parent will have to pay tax on all the interest if it’s above their own Personal Savings Allowance.