Money that’s gifted from parents or stepparents has slightly different rules to savings gifted by other family members or friends.
Any cash in normal non-ISA savings accounts that earns more than £100 in interest per year will be taxed at the parent’s marginal rates. If the parent is still within their personal savings allowance, and the child’s savings don’t breach this, then the money is still tax free.
However, once that limit is breached, then the whole savings pot interest will be taxed at the parents’ rate.
If you are planning on saving for your children, and you think you might breach the limits, you’re therefore better off with an ISA where the money is protected. It’s complicated, so consider seeing an independent financial advisor to ensure you make the right choices.