Interest On Children’s Savings
Children’s Interest In Excess of £100
If a parent puts a sum of money into a savings account for his or her minor unmarried child, the interest is taxed as that parent’s income. For this purpose, ‘child’ includes an illegitimate, adopted or stepchild.
The rule only applies to parents and so there is no problem over investments bought for a child by anyone else, e.g. a grandparent, provided a parent did not fund the purchase.
Where the child’s income from all investments made by the same parent is not more than £100, the rule is ignored and the income treated as that of the child. However, where the income is greater than £100, the liability for tax will be that of the parent/s.