One personal and business bank account provider has recently overhauled its basic children’s savings accounts to attract more business, it was recently reported.
Nationwide’s new fixed rate bond, which carries a 3.15 per cent interest rate before tax, runs for 14 months and can be opened by either a parent or a child over the age of seven. However, its new easy access account only pays a rate of 0.75 per cent, well under the best buys from providers such as Northern Rock, which pay as much as 3 per cent on its children’s account.
Other financial service providers offering more than the Nationwide deal include Halifax with it’s Young Saver, the Ready Steady Save account from Chelsea, and C&G’s young saver, which all offer a 2 per cent return. Meanwhile, Halifax also has a top 6 per cent deal marketed towards parents who wish to put away anywhere from £10 to as much as £100 on a monthly basis, with a total of £1,239 built up at the end of a 12 month period inclusive of interest before tax if savers choose to deposit a full £100 every month.
Industry experts remind parents to ensure that pre-tax interest is paid for their non-tax-paying children by filling in form R85. The personal tax allowance for children is £7,475, with the limitation of only being able to earn £100 in interest before taxes on a yearly basis from cash provided by each parent in taxable savers, and once the interest earned exceeds this £100 cap, the entire amount is taxable at the highest rate of tax applicable to the parent.