childrens accounts?

my 2 children (aged 14 & 10) have just received a couple of K inheritance... I want to set up tax free accounts for them.... and have a few questions...
I saw elsewhere that interest limit is 100 for children ... but could be higher as money has not come from a parent... is this true?
I looked at a nationwide "children's account" and it said it was for ages under 14... so this seems to disqualify older son... is he entitled to an adult account then? (I looked at ING direct and they said age 18+)... or do I open account in my name for them (would this be tax free for them?)
I guess probable use for money will be to fund driving lessons etc in a few years... any recommendations on easy access (or internet) accounts that would meet their ages (and probably instant access as this seem to pay best interest rate)
thanks Andy
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If the money comes from a parent and generates over 100 in interest then it is taxable as the parent's income not the child's.
If the money comes from anywhere else it is taxable as the child's, so will probably be tax free unless the child earns over about 4600. You need to complete an inland revenue form which the bank/bs will provide.

Where did you get that info from?
Nationwide have 2 children's accounts, one for under 12's and one for 12-17 year olds. The rates have always been very good, much better than equivalent adult accounts. Currently just over 4% AER (and that was from before last week's base rate rise).
http://www.nationwide.co.uk/savings/savings_accounts/under_18/smart_2_save/defau lt.htm
http://www.nationwide.co.uk/savings/savings_accounts/under_18/smart_account/defa ult.htm

If the account is in your name then it'll be taxed as your income.
--
Andy




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Andy wrote:

If it was inheritance then the £100 limit won't apply (as it isn't a _gift_ from parents).

ISTR that Nationwide transfer it to a different account (that the child can access without your permission) at 14.

I'd also consider equity investment for part of the money.
Thom
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Thom wrote:

I think you'll find the reason it doesn't apply here is not that it isn't a _gift_ from parents, but that it isn't a gift from _parents_.
Besides, an inheritance *is* a kind of gift, usually. The reason the limit wouldn't apply in the case of an inheritance _from a parent_ is that the parent in question can no longer be taxed. Never let it be said that being dead doesn't have its advantages.
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Ronald Raygun wrote:

There was a small chance that the inheritance was from a parent (as the source of the inheritance was unknown and Andy's status as a parent could be made by inference, but might be incorrect).
Thom
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Thom wrote:

Andy used the words "my children", and so I agree with you that his status as parent is almost 100% certain. I also agree with you that the source of the inheritance was not stated, and all we know is that he wasn't it, since he is still alive.
It's conceivable that they inherited from their other parent, but if that is the case, I assume the interest would not be taxed as his, since the "gift" did not come from him.
Even income from lifetime gifts to children would surely only be taxed as income of the respective donor parent, not jointly as the income of both, unless it was a joint gift. Consider the possibility of the parents no longer being together.
Say daddy's disabled and on benefit, and mummy's run off with a millionaire. She gifts the kids a small fortune. The children's interest would be taxed as her income, not his. Then she gets killed in a car crash (for the sake of argument, more than 7 years later). Then the interest would no longer be taxed at all.
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That's assuming that it does not exceed the children's personal allowances, of course.
Not valid for all values of "small fortune":-)
--
Terry Harper
http://www.terry.harper.btinternet.co.uk/
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Terry Harper wrote:

Quite.

Depends how you define "small". The line at which the fortune ceases to be small has to be drawn somewhere, and it might as well be at the point at which the interest becomes taxable.
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thank for the help (ps inheritance was from grandparent)


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