Date posted: 12th Jun 2024
Given the recent rises in interest rates, everyone with savings is enjoying a higher return of interest paid by their banks.
It is important to remember that tax may be due on the increased bank interest received. Our article may remind you of the implications.
However, for children with savings, they may have their personal allowance of c£12k, to offset against any interest in addition to their savings allowance. This assumes that they have no other income to utilise their personal allowance.
However, who pays tax on the interest, will depend upon where the underlying monies in the child’s savings accounts, have come from.
If the monies have all come from parental savings, for the child, then the parent may be liable for tax on the interest. The only exception is if the interest falls below £100. In that case, there is no requirement for the parent to declare the interest. If the interest is £101, then the full £101 will need to be declared by the parent.
The £100 limit does not apply if the savings monies have come from grandparents, relatives or friends.
As ever, if you need help, please give us a call.
