Is it viable to use a childs account for saving???

A question about : Is it viable to use a childs account for saving???

[img][/img]

Hi all....Is it a viable option to use a childs account to save in?

Thus far following Martins advice I have transfered accounts, and opened up ISA's, so far giving me about Ј500 extra (in interest) per year.

But !!!!!! Looking at the figures, would it not be an idea to open an account in my childs name....and transfer all our money into it, and run it as a current account????
It pays much better interest than the best ISA's....But.....Would Gordon Brown be happy??

I await your inspired knowledge........(And a spelcheker)

Best answers:

• Gordon Brown would not be happy. You can put money into your childs account providing it does not add up to more than Ј100 of interest per parent (in total across all accounts). If the money that you 'gift' your child starts earning more than Ј100 interest all the interest will be taxed at the parents tax rate.
  Nice try.
• I have done the maths ???, and this means at 5% interest you can have a 'floating' :account that you can maximise upto Ј4000 ....Is this not a good idea....
  mmmmmmmmmm..Maybe this thread will get me nominated for tip of the month??? 8)
• Ј4K at 5% interest is Ј200, and falls foul of the threshold.
  With maths like that, you might end up in a different kind of tip.
• Diggingout you are a comedy genius . I believe it's Ј100 per child and not per parent.
• AFAIK you can 'gift' upto Ј3,000 per year per person. Does this mean parents can't 'give' their own children any money - since otherwise your child [each] becomes a 'free-standing ISA' in effect ???
  The 'Ј100 rule' looks very crude. Surely there must be an 'amount' which a parent may gift to a child and thereafter becomes the 'property' of that child? Why else do we have the personal allowance given at birth if any asset in the child's name is deemed to have come from an 'illicit' source?
• I'm surprised at the questioning of the Ј100 rule by some more regular members of this forum. I thought we had covered this many times before.
  Anyway, here goes, from Page 24 of IR110 - Bank and Building Society Interest - A guide for savers
  Quote:---
  Be Careful
  There are special rules if the savings have been given by a parent. If gifts from a parent produce more than Ј100 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. Nor can interest paying accounts be registered to have interest paid without tax taken off.
  The Ј100 rule applies separately to each parent.
  ----
  Quote:
• It is a daft rule.
  For example I use up my annual Ј3,000 allowance by giving it to my Dad
  My Dad then gifts Ј3,000 to my child using up his allowance as he is entitled to do so as he is not the parent of the child.
  I could also put my allowance in the name of my nieces or nephews and we haven't even got into drawing up formalised loan agreements.
• saver smurf,
  Are there any 'approved' ways around this restriction on parents giving money to their children then?
  For instance, if it is a 'payment' or a 'consideration' then the Inland Revenue loves that because they can tax it...
  Yet if the child genuinely carries the same personal tax allowance from birth as everyone else [Ј4745 this year] they could technically 'earn' this as pocket money during the year and suffer no tax, could they not? They would have Ј3000 'income' that they then saved, and interest on about half of that at 5% (say) - about Ј75. The following year they could repeat this and have Ј6000 in their own name and earn approx Ј225 in interest.
  In order for the Inland Revenue's rule on 'parental gifts' to remain effective in these circumstances it would be necessary to prevent parents from 'employing' their children alogether [because 'earned income' is not a 'gift' and vice versa]. Am I correct in assuming that this rule is there simply to 'deter' parents from taking such creative measures in the first place or that the creative measures themselves constitute tax evasion?
  Thanks in advance
  M
• hi.........who has money once they have teenagers ?
  Would you trust your teenage daughter with your savings?
  Is there a facility to open these accounts in secret ?
  puzzled parent ???
• I opened building society accounts for all three of my children at birth.
  The money put into them would be small amounts from me over the years, rarely more than Ј20-Ј30 and
  birthday/Christmas money sent from relatives.
  Interest this year amounted to
  Ј71.06 for first child
  Ј52.59 for second child
  Ј30.88 for third child.
  Total Ј154.53
  Surely according to above, this means as I am holding all these accounts in trust and they have earned over Ј100 in interest that they will be taxed at adult rate?
  Or am I just confused?