Children's Savings Accounts - About Children's Savings Accounts & Some Tax Free Children's Savings Account Options

There are lots of options for you to open savings accounts for your children. However a lot of the time it is better to open an adult savings account for your child in their name rather than a children's savings account as the adult savings accounts tend to have better flexibility and may have better rates too. Having said that here are two tax free ways to save that are especially for children:

Baby Bonds

Baby bonds are a tax free insurance based savings plan which you can get from friendly societies. There are two types you can invest in a unit linked fund or a with profits fund. One thing to note is that the charges for baby bonds can be quite high so you will need to look into this as this can negate the tax free benefits of baby bonds.

National Savings Children's Bonus Bonds

National Savings children's bonus bonds are another tax free way to save money for children. The bonus bonds earn a fixed amount of interest for a set period of five years and then the amount of interest is set again for the following five years and so on.   National Savings children's bonus bonds can be opened by anyone who is over 16 for a child under 16. The minimum you are allowed to save is £25 and the maximum is £1000 and the children's bonus bond stops earning interest when the child becomes 21.

If you choose to save money for your children in a savings account which is taxable, then make sure you open the account in the child's name and that you complete form R85 which means you get the interest paid to the savings account without tax being deducted.