My mum gives my daughter £50 per month, plus top-ups on birthdays. Up until now, she's used a trustee account ("Mrs A Grandparent for Miss B Child"). The balance currently stands at about £8k. As the money is from a grandparent, with a grandparent as trustee, I've been happy that this doesn't get caught by the £100 rule.
We'd like to move the money to an account with a better rate, but my mum is terribly averse to forms, banks and towns in general, and hates setting up new accounts every few years. It would be a lot easier for us if I could set up a trustee account ("Mrs C Parent for Miss B Child"), and my mum would gift into that.
My question is - as the parent, if I am the trustee, will the interest get caught by the £100 rule, even though the money is a gift from a grandparent? I don't think it will, but I would hate to get it wrong.
Thanks for reading
Replies (2)
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It is the source of the money that is important
You are correct in thinking that it is the source of the money that is important and not whose name is on the account as nominee (bare trustee) for the child. If the money comes from the grandparents the interest remains taxable in the child's name and not yours as parent.
You can also register for the interest to be paid gross - see HMRC guidance at:
http://www.hmrc.gov.uk/tdsi/children.htm