messiah

We got some cash for the little 'un when he was born but I need to open an account for him.

I intend to pay a little in each month and the intention of it is so he has something to go towards a house when he's older, and I'll give him it when he's 21.

Recommendations please. Do kids have to pay tax on savings?

Daz34

"Computer says no"

messiah

LOL.

<cough>

JoeyDeacon

As far as I am aware kids don't pay tax on savings. Because of this there must be a limit to the amount they can have in a bank account otherwise whats to stop you opening an account in their name and using it yourself.

Dunk

iTrader: (1)

They pay tax like everyone else, and therefore have a personal allowance to utilise. Most Banks & B.Socs will provide a form for you to sign to allow the interest to be paid gross, as it's highly likely that they won't have any other forms of income. (Unless you're a chimney sweep)
Beware that from memory, the first £100 of interest earnt from gifts from their parents is tax free, anything above that is taxable as parents income. (It's to stop you sheltering your savings in their account.......perish the thought )

D

Chris L

Apologies for hijacking Messiah's thread, but this is something I wanted to do for my two nieces. So are there any actual accounts / trusts / bonds that people would recommend?

MTR

Messiah,
The Halifax do a couple of accounts.

One is a childrens account called 'Save 4 it'

It has a maximum opening balance of £5000, but then you can keep adding to it, I think.
I am not sure what happens if over a period of years having say put in £1000, you eventually reach £5K with interest etc, if they stop you paying in.

The other is a liquid gold account,(from memory), which requires a £1000 minimum opening balance.

But to get the highest rate of interest you need to pay in EVERY month.
You can only make 2 payments a month maximum, ie one standing order and then 1 additional cash/cheque type deposit.
This account pays more interest (just) than the first one.
I can't remember what they pay now, but they seemed a reasonable (and totally safe) way to help them save up.

You need to go in and ask for an appointment to discuss what they have on offer, as they seem to keep changing them.

I think you can pay in a £5K maximum per year, before the taxman wants a cut, on any non taxpaying childrens account.
But you need to check that out.

I found out that the accounts my children had were not the best for interest, when making a deposit.
So had them changed.
To be honest its a minefield, with various options.
60 day accounts,30 day accounts, etc

And I often wonder wether the guidance you recieve is in your best interest (pardon the pun) or the bank/building societies.

As previously posted you MUST sign and send in the form to exempt them from paying tax.
I did this for the first accounts I opened for my children, but the tax office never recieved them, and taxed the accounts.
I had to write to them, fill in the forms again, and get the tax reimbursed.

I suggest you send the form to the inland revenue yourself, if its allowed.

Cheers
MTR

Diesel

Check British Benefit Society and let me know! Havent had time to research it yet! Looks like a good deal from a mutual/charity...

type-r-stan

We chose Britannia Building Society as they had the highest rate on the high street and they don't have shareholders to pay dividends to, however if they were to demutalise (sic) the kids wouldn't get shares (they are strongly opposed to this but you never know).
i think this one is good for babies but i know older kids go for gimmicks and they don't seem to have any pigs on offer!!!

topdog

The Child Trust Fund

The Child Trust Fund is a new and simple way to save for your child. Developed by the Government, Child Trust Fund aims to make certain that every qualifying child has a savings account with a useful sum of money in it by the time they reach the age of 18.

When your child reaches 18 the Child Trust Fund will close and your child will be free to either reinvest their money somewhere else or spend it as they choose. Some children may use it to travel. Others might choose to study, buy a car, or put it towards a flat.

To start each child’s account off, the Government will put £250 into the account. This amount will rise to £500 for families in receipt of full Child Tax Credit (families whose income is currently less than £13,230). It may sound too good to be true, but it is ‘free’ money for your child. On your child’s seventh birthday, the Government will make a further payment into your child’s account. The amount of this is still to be announced.

Once the account is open parents, grandparents, relatives and friends will all be able to pay in up to a total of £1200 each year, tax free, to help the account grow.

If your child was born on or after the 1st September 2002 and receives child benefit they qualify for a Child Trust Fund!

Although the Child Trust Fund scheme does not kick off until April 2005, you’ll be able to apply to open a Child Trust Fund account from January 2005.

Freak

bring back the natwest piggy account

mrklaw

I want tax benefits, but I don't want the savings to be in my kids' names. In theory its for them, but if we have a really rainy day, we'll need the money more than them. (No point having a pot for little Jimmy if we don't have a roof over our heads)

So are there any other options, or is it just a ISA?

messiah

Who do you apply to to get the Child Trust Funds? Inland Revenue or the Banks?

I remember getting some some stuff through about it, but I doubt it'll win any Plain English awards...