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Children's bank interest and the £100 rule

Children's bank interest and the £100 rule

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


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31st Jul 2012 15:22

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:


Thanks (1)
By ktspncr
to Moonbeam
08th Aug 2012 11:45

Thank you Michael for the reassurance and advice, and I am sorry I took a long time to come back to you. (I had signed up for updates whenever someone posts, but didn't get a notification)

Many thanks


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