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Children’s savings accounts

How to choose the best savings account for your child

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Opening a savings account for your child can be a great way to plan ahead, invest for their future and teach them the value of money. This guide explains how children’s savings accounts work, from age requirements to how tax is applied

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How do children’s savings accounts work?

A children’s savings account is a type of savings account designed for children. While you can set up a savings account for your child of any age, for the account to be in the child’s name they must be seven or over. You can usually open a savings account with just a pound, for any child up to the age of 18. 

Child savings accounts generally work in the same way as any other savings account – you pay money in and get interest on your balance in return. One main difference between a child’s savings account and a savings account for adults is there’s usually no tax to pay. Just make sure you tell HMRC if the child receives more than £100 in interest from money given by a parent.

How to choose the best children’s savings account

The best savings account for your child will depend on what exactly you’re looking for. You’ll need to consider things like how regularly you want to pay in, the kind of access you’ll need and if you’re after a higher interest rate. Here are the different children’s savings account options:

Easy access: Easy access savings accounts allow you or your child to deposit and withdraw money whenever you need to. They’re a good option for your child to put away pocket money or birthday cash

Notice account: Like notice accounts for adults, a notice children’s savings account means having to wait (usually around three months) to access the money in the account. They tend to pay higher interest than easy access deals

Fixed rate accounts: With a fixed rate children’s savings account, the money paid in is untouchable for a term chosen at the outset, typically between one and five years. There’ll be a fixed rate of interest that should be higher than you can get with an easy access or even a notice account

Regular savings account: A regular savings account requires you to deposit a minimum set amount each month, typically from £10 to £20, for a period of 12 months. They tend to pay even better interest rates than fixed rate accounts – but you can’t access the money during the 12-month term, and you will need to find a new account after this period

Junior ISAs and Child Trust Funds (CTFs) are both types of tax-free child saving’s accounts. If you’re looking to open an JISA for your child, you can invest up to £9,000 tax-free for the year 2021/22, with the money being unavailable to access until your child turns 18.


Can I save money in my child's account?

Choosing to put your own savings into a child’s saving account would usually mean a higher interest rate than an adult account. Some parents may decide to do this, but you need to be careful of the tax rules.

If the interest earned on the savings in a child’s account comes to more than £100 a year – and the money has been given by the parent, then you must let HMRC know. The parent should be paying tax on all of the savings interest if it is above their annual £1,000 personal savings allowance.

This rule does not apply to Junior ISAs or money saved for children by grandparents or other friends or relatives.

Are there rules on gifting money to children?

When gifting money to your children, you can do so in lump sums. This is because every UK citizen has a tax-free gift allowance of £3,000 annually – so you can gift money to your children without the worry of inheritance tax.

FSCS protection

If your child’s savings account is held in their name, the FSCS (Financial Services Compensation Scheme) can protect savings up to £85,000 in total across all accounts they hold. FSCS can protect both accounts in the child’s name, or where they’re listed as the beneficial owner (if money is held on their behalf under a trust arrangement.)

Do bear in mind that if the money is held in a JISA account or a child trust fund, the FSCS compensation will need to be paid into another ISA rather than being cashed.

What alternatives are there to children’s savings accounts?

If you’re weighing up the right option for your child’s savings, there are alternatives to children’s savings accounts available:

  • A current account for your child can help encourage money management, with optional restrictions you can put in place to make sure they don’t over-spend
  • If your child is over 18, a Lifetime ISA is there to help first-time buyers get on the property ladder. The maximum you or your child can put in to the account is £4,000 a year, and the government will contribute £1 for every £4 that is saved