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Child Savings Account

child savings accountChild Savings Account

Apart from often having to be in a parent’s name until the child is seven, a child savings account operates largely like a standard savings account. Like adults, children also benefit from a personal tax allowance which means that all income up to a certain limit (£5,435 in 2008/2009) is not taxable. This means that in most cases, interest on children’s savings account can be paid without any tax being deducted. Interest rates on children’s accounts are usually higher, often up to 10% AER, so they are a good way of saving for your child’s future. The range of child savings accounts available includes:  

  • Child Trust Fund: Use your child's £250 voucher from the government to set up a Child Trust Fund, saving a maximum of £1,200 a year, tax free.
  • Children's Bonus Bonds from National Savings and Investments (NS&I): Tax-free interest with an additional bonus if the money remains untouched for five years.
  • Index-linked Savings Certificates (NS&I): Invest from £100 to £15,000 for three or five years. The value of the investment is guaranteed to remain equal with inflation, the interest rate is guaranteed and tax free.
  • Premium Bonds (NS&I): Children can own between £100 and £30,000 worth of Premium Bonds which are entered in a prize draw every month for tax-free cash prizes.
  • Individual Savings Accounts (ISAs): When a child reaches 16 years old they can open a tax-free cash ISA.

Any contributions by parents that generate more than £100 of interest per year will be treated as parental income, and that parent will have to pay tax, but interest earned from contributions by others are not. To make sure the interest paid on the account is automatically tax free, parents should make sure they ask for Form R85.

Child Savings Account
ProviderAccount NameRate
(AER)		Minimum AgeMaximum Age
AbbeyAbbey Youth Plus 11 - 15 Account Ex/C 8.00% 11 15
Chorley & District Building SocietyFoxley Fund Account 6.75%
Yorkshire Building SocietyTreasure Bond - July Issue 6.30%
AbbeyAbbey 11 - 15 Account 6.00% 11 15
Clydesdale BankChild's Savings Bond 5 Year 6.00%
Scarborough Building SocietyChildren's Savings Bond 6.00%
Yorkshire BankChild's Savings Bond 5 Year 6.00%
Chorley & District Building SocietyChorleian Elite Ex/C 5.75% 21 30
Chorley & District Building SocietyChorleian Key 5.75% 16 21
Chorley & District Building SocietyYoung Chorleian 5.75% 0 21
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