People with children

The sections below contain tax saving advice for people with children.

Children's personal allowance

All children, regardless of age, are entitled to their own personal tax allowance and capital gains tax exemption. Any income of the child below the personal allowance (£5,225 for 2007/2008) will not have income tax deducted from it.

There are rules in place to avoid parents transferring part of their own income to their children to avoid paying tax at a higher rate. If a parent gives the child capital and the income from that is below £100 per year, the income will be treated as the child's and will not be taxable. If the income is over £100 per year the income will be taxable on the parent.

If money is given to the child from a grandparent or other relative then any income will be treated as being that of the child. This is a very complicated area and a tax adviser should be consulted before any action is taken.