What is the GBP 100 rule on children's savings interest from parents?

Full answer

The 'GBP 100 rule' is an anti-avoidance measure on children's savings. Normally a child has their own Personal Allowance (GBP 12,570 for 2026/27) and savings allowances, so interest on their accounts is usually tax-free. But if a parent gives money to their child and that money produces more than GBP 100 of interest or income in a tax year, the entire amount of that income -- not just the excess over GBP 100 -- is treated as the parent's income and taxed at the parent's rate. The GBP 100 limit applies per parent, per child, so two parents each have a separate GBP 100 threshold for the same child. Who it affects: parents and step-parents saving in their child's name from their own money. It does not apply to gifts from grandparents, other relatives, or friends, and it does not apply to interest generated from the child's own money (for example birthday money the child received directly). Worked example: a parent puts savings in a child's account that earns GBP 150 of interest in the year. Because GBP 150 exceeds GBP 100, the full GBP 150 is taxed as the parent's income, potentially at 20%, 40%, or 45% depending on their band, after their own Personal Savings Allowance. If it had earned GBP 90, nothing would be taxable on the parent. A key planning point: the rule does not apply to a Junior ISA or Child Trust Fund, where interest stays tax-free regardless of who contributed and how much it earns -- subject to the Junior ISA annual subscription limit. So for larger sums from a parent, a Junior ISA usually avoids the GBP 100 trap entirely. Check current Junior ISA limits on gov.uk and use a savings or savings-interest tax calculator to model the interest.

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