Avoiding tax on savings

kimfarren

I am a Uk non tax payer and have just opened an account with Kaupthing Edge and plan to put 30K into their one year bond earning 7.15% AER. I have sent of an R85 to them so will not have to pay tax on the interest. My query is, when the 12 months are up and I transfer the money back into my current account which is joint with my husband who does pay tax, the savings will then be liable for tax for wont they???? It says that the linked account for payments to be made to has to be a current account and as I do not have an income I cannot open a current account. Is there any way round this???

Thanks Kim

debbie42

Are you sure you can't open a current account? I have opened one since I stopped earning. Whether you actually want (or need) one is another matter!

HMRC treats a joint account as being taxed 50/50 on the owners, so you could theoretically be taxed on half the interest and not on the other. In practice, some banks don't let you do that. I'd just switch the cash to a better savings account un your name once it's been transferred to your joint account.

LongTermLurker

kimfarren wrote: »

I am a Uk non tax payer and have just opened an account with Kaupthing Edge and plan to put 30K into their one year bond earning 7.15% AER. I have sent of an R85 to them so will not have to pay tax on the interest. My query is, when the 12 months are up and I transfer the money back into my current account which is joint with my husband who does pay tax, the savings will then be liable for tax for wont they???? It says that the linked account for payments to be made to has to be a current account and as I do not have an income I cannot open a current account. Is there any way round this???

Thanks Kim

I don't think you will be able to link your joint current account to your sole-name KE account. You should be able to find a current account which doesn't need a salary credit - try the Banking board.

CLAPTON

Just to be clear here... the interest earned while in the KE will be tax free as you have filled in a R85.
Surely after the year is up you won't be leaving the 30k in your joint bank account but transferring it to another good savings a/c for which you will fill in a R85?

so why does it matter that you only have a joint a/c?

and I would agreee with the others..there is no reason why you can't get a bank a/c without an income if you want one

earlgrey_3

Hope I've underestood this.

You should get your interest tax-free from KE if you sign an R85. Unless it's a non-joint current account is a specific KE requirement there shouldn't any problem using your joint account. Our joint current accounts haven't been a problem with any of the non-joint savings accounts we've used. You can sign an R85 for a joint account too and have tax free interest on just your half of the interest. You should be able to open a non-joint current account in your name if you have income in the form of interest, not just from employment.

Jonbvn

LongTermLurker wrote: »

I don't think you will be able to link your joint current account to your sole-name KE account.

My wife has a KE savings account with our joint current a/c as the linked a/c. We use it to avoid tax, similar to the OP.

BTW, I really don't understand the OP. Surely nobody would keep £30k in a current a/c?

LongTermLurker

Jonbvn wrote: »

My wife has a KE savings account with our joint current a/c as the linked a/c. We use it to avoid tax, similar to the OP.

Sorry, I seemed to remember seeing something about a sole account had to be linked to a sole current account in your name, but maybe that's another bank - I've obviously got too many and don't know which is which anymore

jdavtz

You'll only pay tax on about one day's interest in the current account (which probably won't be paying interest on the full £30k anyway at a guess) as I'm sure that as soon as it arrives in that joint account you'll set up a transfer into another savings account in your sole name.

fiodyl

can someone please tell me more about the R85 form for not paying tax on your savings?

I was made redundant in Feb, so havent earnt anything since then, do I qualify as a non tax payer?

Also do I need to send a R85 to every bank I have an account with?

jennifernil

You can download one from the HMRC website.

It depends on how much interest you earn, as long as it is below your personal allowance you can register.

Yes you need one for every bank. Used to be one for every account, but now I see that there is room for 2 accounts on the form.

fiodyl

Thanks for the info, Ill head over to HMRC and print a couple off. I'll also check the personal allowance but I think its something like £5400 isnt it? Ill be lucky if I get anywhere near half that, unless I win the lottery between now and april

Just out of curiosity though if I did win the lotto or earn more than the allowance after I fill in the R85, is there another form I need to fill in to reverse it?