Tax Free Savings Plans

Tax Free Savings Plan Just like adults, children have their own personal tax allowance. Therefore, any income they receive within the limit will be tax-free. This applies to all types of income. Money from grandparents, together with any income this generates, will be treated as the child's own.

Many providers such as Friendly Societies offer tax-exempt savings plans for children. For more information about these companies and their products, click here

 

It is also possible to prevent tax being deducted from the interest on your child's bank or building society account by completing the Inland Revenue's form IR85, which should be available from your local branch. This form will register your child as a non-tax payer. This registration is valid until your child turns 16 at which point they will need to re-register personally. Tax that has been deducted can be claimed for up to six years later, you should contact your local tax office for further details.

Share dividends are paid to investors net of a tax credit, this currently stands at 10%. These dividends include income paid by the majority of unit and investment trusts. Taxpayers at the basic and lower rate will have no further tax to pay and although children are not normally taxpayers, they cannot reclaim this tax. It is therefore more tax efficient to choose shares or trusts that are more capital growth based, as they tend to be tax-free.

Below are links relating to Investments for Children:

Growth on your investments within an ISA are tax-free. To get today's best performing ISAs, visit us at www.investments.co.uk/isa

 

UK Investments - Financial, Property & Other Investments - 1998-2008

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