UK savings account for US child living in UK

I am a British parent of a dual US-UK citizen (6 year old daughter) born in the US (both parents British). She has been living in the UK since she was 5 months old.

We want to start saving for her university fees and are considering setting up a UK Junior cash ISA in her name, but are worried about the US tax implications of this. The savings interest is her only income.

I wanted to check that my understanding of the filing requirements are correct:

1. If interest earned is less than $1050, she does not have to file a tax return.

2. If the amount in her account is less than $10,000 then we don't have to file an FBAR.

Is this correct?

In other words, initially at least, are we ok to start saving and not file any forms to IRS?

Any help would be very much appreciated!

Thanks.

Assuming both parents are UK citizens only and now have no US tax obligation, your daughter will not be a dependent on anyone's US tax return. Therefore, I believe:

1. Correct
2. Correct

A CASH ISA is definitely the correct type of account to prevent unwanted complications. Since your daughter was born 6 years ago in the US, I assume she has a US Social Security number (ITIN for IRS purposes).

When opening the account in her name, the bank/building society may ask for a place of birth. Since it's the US, they may ask for a disclosure (form W-9). That's not something to be unduly concerned about. It's been reported that some banks have asked for 1 year olds to sign a W-9 for FATCA purposes! Under the US/UK IGA (intergovernmental agreement), an ISA account is not reportable for FATCA purposes, although some banks/building societies may go ahead and file for expediency.

IRS forms are not something to worry about right now. 

theOAP -Thank you very much for your reply. It's really useful to have confirmation.

Much appreciated.