Do My Child Savings Affect My Benefits Claim?

This blog answers the question “Does My Child Savings Affect My Benefits Claim?” Child Savings can be stored in many different forms of savings accounts or also invested in NS&I bonds. The blog clarifies that any of your benefit claims cannot be reduced or canceled due to having savings for your child.

Do My Child Savings Affect My Benefits Claim?

No, your child savings do not affect your claim for benefits. Claims for benefits can only be affected by an increase in your income or by a high level of savings (benefits get affected from savings above £6000 a month)There are generally no taxes on child savings accounts.

You can have only £6000 of savings which don’t affect your claim for council tax benefits. With savings in excess of £6000, your benefits will be reduced by the value of your capital tariff income (an amount in proportion with your excess savings).

For ordinary taxpayers savings of more than £16000 mean that you cannot claim any council tax discounts at all. Also for every £250 in savings beyond £6000, council tax adds £1 to your income (mentioned as capital tariff income). 

Do parents have to pay taxes on their child savings?

Yes, parents have to pay income tax on their child savings if the interest earned on these deposits exceeds the value of their personal savings allowance annually. The higher rate of the personal savings allowance is £500, and the basic rate is £1000

If the child receives more than £100 in interest on savings deposits from either parent during the tax year, HMRC needs to be notified about it. Although child savings accounts are tax free, parents must pay taxes on any interest income on child savings deposits, if it exceeds their own personal savings allowance.

You should also notify HMRC if a child has an income above their personal allowance of £12,570.

The £100 limit doesn’t apply to savings which are :

  • given to the child by grandparents, relatives, or friends
  • Are stored in a Junior Individual Savings Account or a Child Trust Fund

What is a Child Trust Fund?

A child trust fund is a long-term tax-free savings account for storing money intended for children’s future use. It is meant for use for the savings of children born between 1st September 2002 and 2nd January 2011.

You can continue to add up to £ 9,000 per year to an existing Child Trust Fund account. The money belongs to the child and he or she cannot withdraw it (the money) before reaching 18 years of age. They can take charge of the bill when they are 16.

There is no tax payable on the income of the Child Trust Fund or on the profits it makes. It will not affect any benefits or tax credits you receive

Contact the Child Trust Fund provider directly if you know who owns the account. If you do not know the provider of the Child Trust Fund, you can check with HM Revenue and Customs (HMRC) where the account was originally opened. This can be done by

  • Completing an online form. You will need to create a Government Gateway username and password for registering to use the account.
  • Requesting details of the fund by mail by writing to the following address:

Charities, Savings and International 1



I am a parent of a child aged under 16, looking for my child’s trust fund, what should I do?

If your child is under 16 you’ll need their Unique Reference Number – you can find this on letters from HMRC or Department for Work and Pensions (DWP), for example, if you claim child benefit.

If you ask HMRC by post, you’ll be required to attach all of the following evidence documents:

  • An ID document with your full name and address
  • Your child’s full name and address
  • Your child’s date of birth on their birth certificate
  • Your child’s National Insurance number or Unique Reference Number 

If your child is over 16 you will need to know their National Insurance Number

HMRC will send you details of the Child Trust Fund provider by post within 3 weeks of receiving your request.


What happens to the Child Trust Fund when my child turns 18?

The Child Trust Fund matures on your child’s 18th birthday. The “fund matures” implies :

  • Your child will automatically take over the account
  • No more money can be added

Your child has two options

  • He can withdraw the money from the fund
  • He can transfer the money to an adult ISA

The Child Trust Fund will then be closed.

Until your child withdraws or transfers the money, it stays safe in an account that no one else can open.

What options do I have for my child’s savings accounts?

You can choose from a range of options for your child’s savings accounts The two main options are regular savings accounts and instant access savings accounts. You can open an account at a bank or building society for a child. They can start managing their own account at the age of seven. You can open an account for just £1 initial deposit for each of your children aged 18 and under.

These accounts are a great way to learn about money management and help kids get used to saving. And some providers include a gift with the account, like a piggy bank. In some cases, your child can withdraw their money whenever they want.

.With an instant access account, you or your child can withdraw or deposit money at any time. You will normally get a lower interest rate than other types of accounts.

Regular savings accounts are meant to encourage children to save an amount each month and often run for a certain period of time, for example, 12 months. If you withdraw within this time, the account may reduce the interest you receive. These accounts therefore generally pay a higher interest rate than accounts with instant and easy access.

What are the advantages of storing my child savings in a piggy bank?

A piggy bank is a good idea for very young children who especially need to learn that money is not a toy and should be kept in a safe place. This helps them understand the value of different coins and bills and that larger coins are not necessarily more valuable.

It’s also a good opportunity to give your child regular spending money with a little responsibility – like getting treats on the weekends. It helps them learn that “you have to save for what you want”and that you have to make choices in life. The savings deposit can be as little as 5 pence or whatever your child thinks is right. Don’t overlook the accountability aspect or your child runs the risk of simply collecting money instead of developing an understanding of how money works.

Can I store my child savings in National Savings and Investment Premium bonds?

Yes, certainly NS&I Premium bonds are a great option for storing your child’s savings.

The following reasons explain why you should choose National Saving and Investment premium bonds for your child’s savings. 

  • Unlike other savings or investments where you earn regular interest or dividend income, with Premium Bonds you enter a monthly raffle where you can win between £25m and £1m tax-free.
  • On average, one in three win a prize each year with an investment of £1,000.
  • You can buy them for yourself or on behalf of your child, grandchild or great-grandchild.
  • You must be at least 16 years old to buy premium bonds.
  • You must invest at least £25. You can continue to buy bonds for your child until you reach the maximum holding level of £50,000.
  • You can put your child in charge of protecting their own investment information and helping decide what to do with their money if they win.
  • They are suitable if you want to buy them as a gift for your child or grandchild under the age of 16 if you are their parent, guardian, or grandparent.
  • HM Treasury backs them so any money you invest is totally safe.

What are the benefits of using notice savings accounts for child savings?

Notice savings accounts may be right for you if you want to take advantage of competitive variable interest rates and have the flexibility to withdraw your money after a certain period of notice.

A notification account might also be the best one for you for the following reasons:

  • Your savings are in a secure deposit with the bank instead of lying around with you.
  • You earn a competitive floating interest rate
  • In a notification account, you can withdraw your money after a fixed cancellation period
  • They make it less likely for you to waste your hard-earned savings over a short period of time or on a few basic child expenses (food or toys)
  • Notification accounts are free to open

What is the High-Income Child Benefit Tax charge?

You may be required to pay taxes, known as “High Income Child Allowance”, if you have individual income above £ 50,000 and:

  • Either you or your partner is claiming family allowances (personal allowances together)
  • someone else claims family allowances for a child who lives with you and contributes at least an amount equal to the child’s support (funds)

For checking if your income is above the threshold, you need to calculate your “adjusted net income”. Your adjusted net income is your total taxable income before any personal deductions and minus things like Gift Aid.

To pay the High-Income Child Benefit Tax charge you need to register for Self Assessment and file a self-assessment tax return each year (you also pay HMRC your full tax charges)

You must notify HMRC of the fiscal year you are requesting, in addition to:

  • name, address, date of birth, and National Insurance Number
  • Unique taxpayer reference ID, if you have one
  • the adjusted net income amount
  • partner name or former partner

If possible, indicate your partner or former partner’s information details such as:

  • address
  • date of birth
  • National Insurance Number, if you know it
  • Unique taxpayer reference ID, if you have one

Send your letter to this address:

Pay As You Earn and Self Assessment

HM Revenue and Customs



This blog post addressed the question “Do My Child Savings Affect My Benefits Claim?” Your child savings don’t affect any benefit eligibility requirements as child savings accounts are considered separately from regular bank accounts for tax and income calculations. Getting Child Benefit payments, Personal Independence Payments, Income Support or the Jobseekers Allowance remains unaffected by the building up of your Child Savings Account.

Please feel free to comment on the content or ask any questions in the comments section below :

Frequently Asked Questions (FAQs): Do My Child Savings Affect My Benefits Claim?

What happens to a Child Trust Fund if a child is terminally ill or dies?

If your child is terminally ill, you can withdraw money from the Child Trust Fund account. When they die, the money goes to whoever inherits their wealth (property and possessions).

“Terminally ill” means that they have a disease or illness that will get worse and will probably not live more than 6 months. Only the registered contact person can withdraw money from the account.

You need to complete the Early Access Form for your (terminally ill) child. This form will inform to let HM Revenue and Customs (HMRC) about these issues:

  • your child is terminally ill
  • you want to withdraw the money from the account

You have to prove that your child is terminally ill. This could be through the medical report of a certified general practitioner

If your child dies. You will need their death certificate to inform HMRC of this development. Money from the account is paid to the person who inherits the child’s estate. This is often one of the child’s parents, but if your child was married, it could be their husband or wife. If you receive Child Benefit for a deceased child, these may continue to be paid for a short period.

How do children’s savings accounts work?

Savings accounts for children usually work the same way as savings accounts for adults, although they differ between banks and mortgage banks, so it is best to check all details with the account provider.

Usually, a child savings account is run by parents or guardians until the child reaches a certain age (this age varies by account).

Specific features of children’s savings accounts include:

  • Higher rates of interest on child savings, but you or your child may not be able to withdraw or use the money (until they turn 18)
  • A minimum opening deposit requirement can be as low as £ 1 for children under 18 years of age.
  • Children over the age of seven can usually get to manage their own savings account


Children and Families Act 2014 (Transitional and Savings Provisions) (No.2)

Inheritance (Provision for Family and Dependants ) Act 1975