Videos explains the National Savings Investment Account for Children and whilst interest is taxable, how it could be tax free for children.
“Hello there, January and the sun is in my eyes. It's a miracle given all the hail and snow and storms and everything else we’ve been suffering in the UK recently, January 2015: Theme for this video continuing with savings for children, again looking at National Savings opportunities and specifically the National Savings Investment Account for children.
So first things first, the investment account is actually available for both adults and children. It is a fixed rate payable yearly, currently January 2015, the interest rate is 0.75%, so it's not going to set the world on fire but it is a National Savings and Investment product so ultimately it's backed by Her Majesty's Government, indirectly.
[And] in terms of the minimum: the minimum that can be paid in to an investment account is £20, the maximum that can be held in investment account is £1 million, so quite a sizeable range there in terms of maximum and minimum of investment. Like I say: not going to set the world on fire, fixed rate, annually it is payable, the interest rate it accrues daily, so it accrues every single day, so keeps accruing every day but only added on 1 January so 1 January is when interest is added based upon what you've accrued over that period.
Available to both adults and children and in the same way that Children's Bonds with National Savings and with premium bonds for children, the account is nominated for the child. What I mean by that is the account must be in the name of the parent or guardian, legal guardian, but it is then held for the benefit of ‘junior’ child so Mr Bloggs or Mrs Bloggs it's in the name of but held nominated for the benefit of Junior Bloggs.
Now, interest on investment accounts is taxable, so very different to children's bonds and to premium bonds. An investment account is taxable. Now something that you may not be aware of [is] that all children in the United Kingdom have a personal allowance in exactly the same way as adults do.
So what I mean by that is currently the personal allowance is £10,000 going up in April 2015 to £10,600 and likewise your child has a personal allowance of £10,600 so they can earn, whether they're working or whether they are receiving income or interest which is potentially taxable, they can receive interest up to or income up to £10,000 currently, £10,600 with effect April 2015 before they start to pay any tax.
All as I would say with that is just wtahc the interest if interest rate is so not 0.75% then you can put a substantial amount of money into an investment account in the name of (or nominated for your child) and receive interest up to £10,000/£10,600 etc. before any tax is due.
So that's a National Savings Children's Investment Account. Any questions, as ever, please do come back to me. Thanks very much for watching.”