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I need a bank account for my young child. What/who should I go for?

(9 Posts)
puffling Thu 25-Sep-08 13:14:37

I'd like a current account with high interest. Woould I just get any account or do you need to get specifically a child's account?

undercovercat Thu 25-Sep-08 13:15:33

childs account so you are not paying tax on the savings. Halifax used to have a 10% one.

elkiedee Thu 25-Sep-08 13:17:18

You'd be better with a child's savings account for high interest - presumably you don't need to write cheques or use a debit card on it yet. Some child's savings accounts do offer a card for cash withdrawals but I think there's an age limit for getting the card eg Nationwide has an account for 0-18 year olds but they can have a card from 7 I think.

puffling Thu 25-Sep-08 13:33:59

Thanks both.

undercovercat Thu 25-Sep-08 14:57:46

moneysavingexpert.com has some good bedtime reading on kids accounts, once you start reading its hard to stop though

islandofsodor Thu 25-Sep-08 14:59:47

If you want to save a set amount for 12 months and are not going to touch it for 1 year Halifax has the best rate and you also set up a linked savings account you can put money in and out of with a decent rate.

Moneysaving expert reccomends this one.

madness Thu 25-Sep-08 15:04:52

I think however that the no tax on interest does only apply if money is not given by the parents, otherwise it is only up to a certain amount that is tax free (I suppose otherwise everyone would always use a children's account for their savings). I asked about this in my bank but thr person didn't know anything about it. I think I read it on a "governement" website.

Haven't got one myself butsome online ones seem to be getting high interest

elkiedee Thu 25-Sep-08 15:41:11

If the interest is more than £100 gross then you wouldn't get it tax free if you're saving for your child

janinlondon Thu 25-Sep-08 16:16:21

This is the clearest explanation I have seen of the interest/tax issue. But I do know people who've been done by the revenue for this, so you have to be very clear that the money did not come from a parent.

If a child generates more than £100 interest in the course of the year from money specifically given by each parent, this income is taxed at that parents' tax rate.

In practical terms this means you could put up to £1,850 in the 5.7% top paying children's account, and it wouldn't be taxed, as that would generate around £105. Just to clarify, this doesn't mean £1,850 every year; it's the interest generated from all cash given in this and previous years.

Yet these rules only apply to parents, not grandparents, aunties, uncles or friends – they may all give your children as much as they like and, providing it's a genuine gift, it counts as the child's money without a £100 limit.

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