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All children in the UK have their own personal annual allowance. However, anti-avoidance laws prevent this allowance being utilised by parents of children aged under 18 with some minimal exceptions. If older children are employed by a parent, then they can receive income paid as wages subject to the usual rules.
There are special rules if a parent gifts significant amounts of money to their children which results in them receiving bank interest of more than £100 (before tax) annually. If this is the case, the parent is liable to pay tax on all the interest if it’s above their own Personal Savings Allowance.
The £100 limit does not apply to money:
Children born after 31 August 2002 and before 3 January 2011 were entitled to a Child Trust Fund (CTF) account provided they met the necessary conditions. Junior ISAs were introduced after CTFs were phased out to encourage parents to save money for their children’s future. However, unlike the CTF accounts, the government does not contribute any public funds.
As mentioned above, any income from CTF’s or Junior ISA’s is exempt from Income Tax and CGT on the child or the parent even where the invested funds came from the child’s parents. The 2018-19 subscription limit for both CTFs and Junior ISAs is £4,260.
Source: HM Revenue & Customs | 30-05-2018