Stashing kids’ cash offshore
My previous post about tax on children�s savings led to another question - about avoiding it!
The mum in question asks: ‘What would be the position if a parent invested money for a child and kept it in an offshore account’ If the interest was in excess of £100, would this only be taxed when it was brought back onshore? (This could be some years later).�
This is a bit of a complicated one, but in a nutshell�
Most offshore accounts pay out yearly and this is taxed as if it is part of the holder’s income. (So it’s taxed at your income tax rate, not the 20 per cent savings rate.)
However, if you choose a deferred interest or ‘roll-up’ fund, it isn’t taxable until the year you cash it in.
Either way, the holder has to pay the tax eventually.
And that is likely to be you. Offshore accounts are almost exclusively open only to adults. A rare exception is Bradford & Bingley International’s YoungSave.
Click here to learn more about saving offshore.
