Interest on children’s savings
13/06/2024

All children in the UK have their own personal allowance, currently £12,570. There are special rules if a parent gifts significant amounts of money to their children which results in them receiving bank interest of more than £100 (before tax) annually. If this is the case, the parent is liable to pay tax on all the interest if it is above their own Personal Savings Allowance (PSA). These anti-avoidance laws are designed to prevent a child’s personal allowance being used by parents of children aged under 18, with some minimal exceptions.

The PSA allows basic-rate taxpayers to receive interest of up to £1,000 on savings income tax-free. For higher-rate taxpayers the tax-free PSA is £500. Taxpayers paying the additional rate of tax do not benefit from the PSA.

The £100 limit does not apply to money given by grandparents, relatives or friends. In addition, any income from Junior ISA’s or CTF’s is exempt from Income Tax and CGT on the child or the parent even when the invested funds came from the child’s parents. The 2024-25 subscription limit for both CTFs and Junior ISAs is £9,000.

If older children are employed by a parent they can receive income paid as wages subject to the usual employment rules.


About us  

Our director-led service is supported by the expertise of our highly skilled staff. We believe that our reputation for technical excellence is one of the main reasons for the company’s continued growth. 

Since the 1960’s we have been looking after the financial needs of our diverse database of clients. The practice of today evolved from two long-established firms originating in Coventry (Luckmans) and Kenilworth (Duckett Parker) merging in 2000.

Our vision in 2000 was to combine the directors' expertise to the greatest advantage for you – our client. That ethos still holds true and has enabled us to build a relationship with our clients that lasts.

Legal

Registered to carry out audit work in the UK and Ireland and regulated for a range of investment business activities by the Institute of Chartered Accountants in England and Wales.

Contact us

LDP Luckmans
1110 Elliott Court, Coventry Business Park
Herald Avenue
Coventry
CV5 6UB

+44 (0) 24 7662 7200
partners@luckmans.com
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