Children Savings accounts
This article deals with opening a child's savings account. Trust Funds are covered here Child Trust Funds.
Children's savings accounts offer Parents, family and friends the opportunity to invest money for children in interest bearing accounts. The money is 100% safe as an investment and will help to teach children the value of saving. Most children's accounts offer a slightly higher interest rate than adult accounts but be sure the account you choose is offering a competitive rate.
Children have a tax allowance which allows them to earn interest in an account without paying tax (currently £4,895). To ensure your child receives their interest tax free you will need to complete a Form R85, most banks will give you this form when you open the account. Be aware that if a child earns over £100 in interest on money invested by their parents the interest will be liable for tax, for this reason it is advisable to ask family and friends to pay money into your child's account for Birthdays and Christmas's.
Under the age of 7 your child's account will need to be held in your name with the child's initials attached. From the age of 7 the account can be held in the child's name. If you open an account for your child prior to the age of 7 and it is held in your name it will generally transfer to them at the age of 11. At this point the bank will open your child a new account and issue them with a cash card. This is something to be aware of, you may have been saving 100's of pounds for 10 years and then your child has control of the account (unless you hide their mail and cash card)!
Banks and Building Societies all offer different incentives for opening accounts, some offer free gifts but make sure the interest rate you receive is as high as possible. To see the latest rates and search for the most competitive savings accounts in the market visit MoneySupermarket
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