There are over 100 children's savings accounts on the market. Children's accounts often pay a higher rate of interest compared with other accounts, perhaps to instill the savings habit and encourage future business. With their own accounts, children can learn how to manage their cash, and how increased savings mean more interest. They will also understand how to save towards a particular goal.
Most products can be opened from birth. They don't have cheque books or payment cards, but some have cash cards allowing withdrawals from the age of seven. Accounts are largely branch-based, but a few have internet access.
Remember to make use of your child's income tax-free allowance. Fill in form IR85 which will allow interest to be paid gross by the bank. However, only the first £100 of interest paid on money gifted from a parent is tax-free.
Since 2002 new Government-sponsored Child Trust Funds enabled parents to save up to £1200 a year for their children without incurring tax. The Government contributes £250 in the form of a voucher at birth and again on the child's 7th birthday. However, all money accruing in the fund is held in trust and cannot be touched until the child's 18th birthday.To find out more visit
www.childtrustfund.gov.uk/.
Back...
