What are the most sensible sorts of investment for children for tax purposes?
The simplest answer is that savings accounts with building societies or banks that are in the children’s names should pay the children interest gross (i.e. without tax deducted). It’s still quite permissible for children to hold shares in companies, even though the tax credits on the dividends are not refundable. If the children don’t have any investments and if you have surplus after-tax income of your own which you can give to your children, this is usually tax free in the children’s hands and, if you are particularly wealthy, is a very useful way of transferring income to them, so that the children can accumulate a sum that can then be invested. However, once the income from the source exceeds £100 per annum it will be taxed in your hands. Where you transfer your own shares to your children, if the children are under 18, the income arising on these shares will be regarded as belonging to you, so this does not save tax. The Child Trust Fund is a tax-free savings scheme designed for c
