Most children don’t pay tax, so the interest they receive on any savings will be tax-free.
There are special rules in place with HMRC if the savings have been given by a parent. If gifts from a parent produce more than £100 gross income a year, the whole of the income from the gift is normally taxed as the parent’s income and a child cannot get back any tax on that income. Nor can interest paying accounts be registered to have interest paid without tax taken off. The £100 rule applies separately to each parent. The £100 rule applies to income earned each year and it does not matter whether the fund is comprised of part capital and part added interest. The £100 rule applies as long as income is over £100 in any one year for any one child from one parent.
The Virgin Money Young Saver account will be automatically transferred into an appropriate adult savings account on 5th April, following the child’s 16th birthday.
We’ll ask you whether you want the account to retain the trustee status.