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Where Taxpayers and Advisers Meet

Another Child Savings Question

chambersiain
Posts:41
Joined:Sun Feb 06, 2022 4:58 pm
Another Child Savings Question

Postby chambersiain » Tue Jun 06, 2023 4:46 pm

Sorry for another question on the topic of child savings.

It is very clear that any savings income over £100 is taxable against the parents income if the child is below 18.

What however if the savings account is of a 5 year term and interest is payable at maturity, the owner of the account was a child at the start say 14 but at maturity is an adult of 19.

Is any of the interest counted against the parent or as the owner of the account is 19 comes out of their personal tax allowance?

Please note in this example the income or intestine is all received at maturity at the end of the 5th year.

chambersiain
Posts:41
Joined:Sun Feb 06, 2022 4:58 pm

Re: Another Child Savings Question

Postby chambersiain » Tue Jun 06, 2023 5:07 pm

Lol text typing auto spell - not intestine, I meant interest

bd6759
Posts:4239
Joined:Sat Feb 01, 2014 3:26 pm

Re: Another Child Savings Question

Postby bd6759 » Tue Jun 06, 2023 7:33 pm

If it is truly an outright gift to the child, the interest arises (and is taxable) when the child is over 18. The “ child” would be liable to the tax.

This assumes that the child has full ownership of the capital and interest to do with as they please.

chambersiain
Posts:41
Joined:Sun Feb 06, 2022 4:58 pm

Re: Another Child Savings Question

Postby chambersiain » Tue Jun 06, 2023 7:41 pm

Thank you, but isn't it due to the child now being an adult when the interest is paid as income, nothing to do with it being a gift, purely benefiting from the age of the account owner at the time the interest is accrued?

bd6759
Posts:4239
Joined:Sat Feb 01, 2014 3:26 pm

Re: Another Child Savings Question

Postby bd6759 » Tue Jun 06, 2023 10:59 pm

I said he will be taxable if the capital and income is his. Since the capital was once his father’s it has to become the child’s by some mechanism. Your original post suggested a gift. That would work if was an outright gift.

I really don’t understand what point you are now trying to make. Either the capital is his or it is not.


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