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Help! Taxman wants another 20% from our interest!
Tudor_2
Posts: 9 Forumite
I set up a deposit account when we sold our house 3 years ago and went into rented accomodation. The account was in my name and I wanted the interest paid monthly into my wifes current bank account, to pay the rent.
The B&B wouldn't do this, they would only pay the interest into my account, as I was the account holder. They won't pay it to a 3rd party even if it's your civil wife.
So, each month I manually did a transfer of the interest received into my current account, into my wifes. She received the interest, usually the same day or day after it came into my account.
I would then do a Tax return each year for my wife, declaring the interest paid and tax deducted at source and claim her personal allowance. This would result in a tax rebate paid to her, as she has no other form of income.
I thought this was all fine until, last week, HMRC are now saying that as I was the account holder and am a 40% tax payer - I now owe them another 20% Tax from the interest received. With interest and penalties this could run up to around £20,000!
It doesn't seem to matter that I paid the interest to my wife each month, which all seems VERY unfair.
Anyone out there with any similar experiences or advice would be most welcomed.
Many Thanks
The B&B wouldn't do this, they would only pay the interest into my account, as I was the account holder. They won't pay it to a 3rd party even if it's your civil wife.
So, each month I manually did a transfer of the interest received into my current account, into my wifes. She received the interest, usually the same day or day after it came into my account.
I would then do a Tax return each year for my wife, declaring the interest paid and tax deducted at source and claim her personal allowance. This would result in a tax rebate paid to her, as she has no other form of income.
I thought this was all fine until, last week, HMRC are now saying that as I was the account holder and am a 40% tax payer - I now owe them another 20% Tax from the interest received. With interest and penalties this could run up to around £20,000!
It doesn't seem to matter that I paid the interest to my wife each month, which all seems VERY unfair.
Anyone out there with any similar experiences or advice would be most welcomed.
Many Thanks
0
Comments
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It's not really unfair. If any Higher rate tax payer could give the interest to partners/children etc it would be very difficult for HMRc to trace what was going on.
Unfortunately you have left the funds in an account in your name, so the interest is yours.
Too late now but you should have looked at any option to have an account in your wifes name to benefit from her personal allowance.
I don't think you will get anywhere with this - sorry
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Ok. thanks to both of you. I didn't want to put the money in my wifes name as it was £400,000, and at that time our marriage was going thru a very rocky patch. I just wanted to try and protect myself a little?
Oh well...0 -
You will also need to square up your wife's inaccurate Tax Returns as "she" has claimed tax relief on tax that she hasn't actually paid.I would then do a Tax return each year for my wife, declaring the interest paid and tax deducted at source and claim her personal allowance. This would result in a tax rebate paid to her, as she has no other form of income0 -
I would suggest that you change the account to a joint account and declare to the inland revenue that all interest will be paid to your wife. The interest could then be paid directly to her account since its a joint account.
As far as divorce or a breakup goes, any half decent solicitor would in any event ensure she got her share of the money."How could I have been so mistaken as to trust the experts" - John F Kennedy 19620 -
I can't believe your attitude.Ok. thanks to both of you. I didn't want to put the money in my wifes name as it was £400,000, and at that time our marriage was going thru a very rocky patch. I just wanted to try and protect myself a little?
Oh well...
You say in your original post that "I set up a deposit account when we sold our house", (my italics) and then you have the whole sum put into a sole account in your name to protect yourself. What about your wife's share?
If you'd opened a joint account, at least she could have legitimately offset some of her interest against her personal allowance. So now as a result of your actions you've been asked to pay more tax, and as KingL has pointed out you've inaccurately completed your wife's tax return which may require a further payment from you to resolve. :rolleyes:"The trouble with quotations on the Internet is that you never know whether they are genuine" - Charles Dickens0 -
Was the house just in your name? When we sold ours, the money had to be transfered to a joint account, they wouldn't do it to an account in one name.
Nevertheless, it is a lesson learnt, don't think there is a way out of this one.0 -
I'm puzzled why he calls her his "civil wife" - what's one of those!?0
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>"civil wife" - what's one of those!<
One that is always cussing and belching?0 -
Duplicate post .... as well as attempted duplicate allowances!
http://forums.moneysavingexpert.com/showthread.html?t=1343647If you want to test the depth of the water .........don't use both feet !0
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