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.
Tax credits
Anyone with dependent children may be able to claim child tax credit and working tax credit. For more information, refer to the tax credits section.
This page was last reviewed on 03 April 2006. The information may not reflect changes in legislation made after this date.
This is only a guide to your tax position and should not be relied on in place of professional accounting or tax advice. Any calculated figures are illustrative and are based on the data you provided.
