Childrens savings and interest

[Redrupunzle]

So I've got a savings account for each of my Dds, husband and I also share a savings account. The kids rate of interest is way way better then ours, seems to be a standard thing.

Can I get in any kind of trouble for transferring our savings into their accounts for a while? Dd is earning the same interest on her money as I am on and extra 0 on the end.

The way my husband views it is the money I give to her for her savings is technically my money anyway so wheres the harm in putting some of my money in to

You will need to pay tax on the interest if it is more than £100 in the tax year (applies to money deposited by the parents)

Thank you for your reply. I've been googling since my first post but it's just led to more questions...

So my parents do like to give money for their savings at Christmas time, it's usually been cash, should I ask them for cheques to distinguish between money they are putting in and money I am?

I've read online that fact about need to pay tax on interest over £100, fair enough. It also says they can earn more interest then that tax free as long as it is under my personal allowence

So for example, the tax free savings allowence is £1000pp so say mine and husbands savings account earned us £500 per year interest we'd still have £1500 spare right? So dds could earn £1500 in interest between them before tax. Is that right? Those figures are made up

So basically between the 4 of us (2 adults 2 kids) we can earn £2000 in interest before tax?

I think you’re getting this wrong. The savings allowance also depends on your other income.
If grandparents give kids money the £100 limit on interest doesn’t apply. If it’s your money, it does unless it’s under your own personal allowance and that will depend on your other income.

To be blunt, you are considering tax evasion.

Many children's savings accounts with higher interest only pay this on fairly limited amounts of money - a few thousand at best. So while the interest rate will look good, the amounts involved are small.

If the rule on interest is any interest over £100 is considered to be the parents, then it would come out of your personal savings allowance, so yes, you can then earn some of the interest tax free, up to your allowance - £1000 pp for you and DH or £500 if either or both of you are higher rate tax payers.

I would consider this to be legitimate tax planning, not tax evasion, or agressive tax avoidance, because the sums involved are small, and it is overt that this is allowed within the tax system, it's not exploitation of a loophole.

Yeah I'll admit what I'm doing looks and probably is dodgy but I'm not a terrible person

Currently I try to put away £10/20 a month per child, it's all I can afford. Husband has suggested I stop doing that and put that money into our own savings. We've not got much so I was hoping to earn that £100 interest on their accounts as way of payments/savings for them. If that makes sense.

After a recent fright I'm aware I've only got enough saved for a funeral, I've life insurance to but I want to try and save more.

I'm a SAHM/self employed farmer and not currently paying tax as my earnings are too low at 8k.