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The best accounts for your child’s Christmas money

Earn the best rate on your children's savings
Child saving

If your son or daughter receives cash gifts this Christmas, encourage them to save with a Best Rate children’s savings account

If your son or daughter receives money from grandparents, aunts and uncles this year, encourage them to save with a Best Rate children’s savings account.

Children often receive cash for Christmas. While it may be tempting to allow your kids to spend the money in the new year sales, you may want to encourage them to put some aside. If you do, make sure your child is getting the best return on their money by choosing a top-paying children’s savings account from the table below.

Compared with a Junior Isa or child trust fund (CTF), which lock up your child’s money until they turn 18, children’s savings accounts offer instant or near-instant access when the cash is needed.

Does my child have to pay tax on their interest?

Most adults have 20% basic rate tax deducted from the interest earned on their savings. However, it is unusual for children to pay tax on interest.

Children, like most adults, have a tax-free personal allowance (£7,475 for the tax year 2011-12). So long as their annual income, including interest, is below £7,475, they won’t have to pay tax on interest.

  • For a child to receive interest tax-free, the parent or guardian needs to fill in a Form R85 for each account.
  • To claim back any tax already paid by the child, the parent or guardian can make a claim to HM Revenue & Customs (HMRC) using Form R40.

Best Rate children’s savings accounts

Provider AER £10+ AER help Free gift Max age Access Access help Customer score Customer score help Find out more
             
HSBC
My Savings
HSBC
3.00% Yes 17 years old
  • Branch
  • Internet
  • Telephone
51% Visit site
Mansfield BS
Young Saver

2.50% Yes 17 years old
  • Branch
  • Postal
n/a Visit site
Saffron BS
Smart Saver

2.05% Yes 17 years old
  • Branch
  • Postal
n/a Visit site
Bank of Scotland
Young Saver
Bank of Scotland
2.00% No 15 years old
  • Branch
56% Visit site
Halifax
Young Saver
2.00% No 15 years old
  • Branch
53% Visit site
Skipton BS
Leap Issue 3

2.00% Yes 17 years old
  • Branch
  • Postal
56% Visit site

Help

AER

AER is annual equivalent rate and shows how much interest you’ll receive in one year.

Back to AER in money table

Access

Key:

  • Branch
  • Internet
  • Postal
  • Telephone

Back to access in money table

Customer score

Which? score based on customer satisfaction and likelihood of recommending company to friend/family member.

Back to customer score in money table

More on this…

  • Junior Isa review- compare the new long-term accounts to find the best one for you
  • Tax and your children – how kids are taxed on their savings, investments and other earnings
  • Child Trust Funds explained – a quick guide to CTFs and how to switch
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