It’s child’s play to put money aside
1. You can open a savings account for a child at banks or building societies. They are divided between the type a child can run themselves, paying and withdrawing money from a branch, and those where you save money for the child.
2. If you are saving for your child (rather than the child stowing away Christmas gifts and pocket money) look at regular saving fixed-rate deals where you put away money every month. These can start from as little as £1 a month.
3. A junior Isa (Jisa) is a scheme used by adults to save for children. You can put up to £4,260 into a Jisa this tax year (2018-19) for a child aged up to 18. When the child reaches 16, they run the Jisa and they can withdraw the money at 18. You can have shares and cash Jisas.
4. If you're looking for an account for your child to save in themselves, bear in mind your child will need to be at least seven before they can open an account themselves. From age 11, your child can normally get an account with a debit card which means they can buy stuff online ...
5. Check out a comparison site or savings tables online for the top children's account rates. Usually, Nationwide and some of the high street have good deals for kids' current accounts (which you could use as a savings account). But also look at local, regional building societies: they can offer good deals for those who live nearby.
6. Don't be swayed by freebies: what's important is the interest rate plus ease of access - you want to make it easy and as rewarding as possible for your kids to save.
7. Children, just like adults, have a personal tax free allowance (for 2018-2019 this is £11,850). If they have earnings over this, they will pay tax. Few children fall into this category.
8. In the past, when you opened a savings account for your child, you filled in a form R85 to get tax-free interest. New rules mean this may no longer be necessary but it’s worth checking.
9. If parents give their child money which earns them more than £100 in interest, that interest will be treated as if it’s the parents’ money. So you can’t use your child’s account to shelter your millions. There are exceptions: the rule doesn’t apply to interest from Jisas and only affects money given by parents or step-parents.
10. If your child has a Child Trust Fund (there were cash payments from the government for kids born between September 2002 to January 2011) then it’s worth moving the CTF over to a Jisa. Now CTFs are no longer on sale, rates and investment choices are better on Jisas.
- For a list of the best-paying accounts, go to Moneyfacts here.
- Good tips on investing Junior Isas at the Daily Mail's site here.
- Money Saving Expert has a regularly updated list of good children's accounts here.
Last updated 23 November 2018.