Protect Your Children; Parents Should Claim Back Tax windfallsMONEY MAIL
Byline: GILLIAN BARTON
CHILDREN who were given windfall shares when building societies converted into banks could lose millions to the taxman - unless their parents step in.
Like their parents, youngsters can earn [pounds sterling]4,045 before they have to pay tax, so they can claw back the tax automatically deducted from their dividends. But they will say goodbye to a quarter of this income if they do not tell the taxman.
Parents may not realise that dividends can escape tax, because it is often their name on the share certificate this is because the parent's name often appeared first on the child's savings account.
Despite this the shares belong to the children.
Parents can claim the tax back on behalf of their children by using the vouchers, known as tax credits, attached to the dividend certificate they get.
Yesterday the Halifax announced that its shareholders are to receive a dividend worth 17.5p for each share, which will be paid on May 11.
It reckons the majority of the one million under-12s who have Little Xtra accounts will have received shares in their parents' names.
'Some parents will have received a total allocation of shares which include their own and their children. It will be for the parents to separate the two for tax purposes,' says Halifax spokesman Mark Hemingway.
Other windfall shareholders should also take action.
* ALLIANCE & Leicester around 150,000 children's accounts qualified for 250 free shares issued in their parents' names. Total dividends for this year are 20.8p per share so parents could retrieve [pounds sterling]1.95 million of tax on [pounds sterling]7.8 million-worth of dividends.
* WOOLWICH - 3p a share has already been paid and another 13p is due on May 18.
That means a total payout of [pounds sterling]105 for the average shareholding and [pounds sterling]26 in tax for parents to claim back for their children.
* NORTHERN Rock -60,000 trustee accounts include many held for children.
Shareholders will receive a [pounds sterling]35 dividend on May 29, [pounds sterling]8. …