Earn 3.25% at Nationwide and Coventry BS for your child

By

Sylvia Morris

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Parents who want to top up their children’s Isa have until April 5 to put in the maximum £3,720. The money is tied up until the child is 18.

The top rates come from Nationwide and Coventry building societies, both at a tax-free 3.25 per cent.

Beverley BS, Lloyds, TSB, Halifax, Bank of Scotland and Tesco pay 3 per cent.

If you prefer not to lock away the cash for so long, there are taxable easy-access accounts paying 3 per cent to children, such as Nationwide Smart Limited Access and Halifax Young Saver.

Child Isa: Nationwide and Coventry building societies offer top rates, both at a tax-free 3.25 per cent

Last week, Santander launched its Mini 123 account paying 3 per cent on balances between £300 and £2,000. Below this, the rate is 1 per cent or 2 per cent.

Lloyds and TSB Young Saver accounts pay 3 per cent to children whose parents or grandparents have a current account with them.

For regular saving, Halifax at 6 per cent fixed for a year on sums between £10 and £100 a month is a winner.

Like adults, children have a personal allowance of £10,000 for the tax year starting on April 6.

They can earn up to this level without paying income tax.

But there is a £100 cap on the tax-free interest on money from parents and step-parents outside a Junior Isa, or its forerunner the child trust fund.

Breach this barrier and tax is payable at the parents’ highest rate on the lot, not just the amount over £100.

At 3 per cent, you can put £3,330 into an account without busting this limit.

Fill in form R85, available from banks and building societies, when opening a taxable account for a child to ensure interest is paid before tax is taken.

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Toxin,

Fomalhaut, United Kingdom,

1 hour ago

Figures please. New parents have to pay ten times their salary for a house, child care has reached 10K a year, and as the state pension is unlikely to exist when they get old, they have to make sure they’ve got something set aside for themselves because ever smaller houses means retirement downsizing is being consigned to the history books. How many really have left overs to put in a junior ISA?

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Earn 3.25% at Nationwide and Coventry BS for your child