Non tax payer...?

youreds

My partner recently had a baby & is now on maternity leave & getting the £100ish a week SMP. It's extremely doubtful that she will be going back to work in the next couple of year, instead she'll be a full time mum. She earns(ed) £13k & finished at the end of August, so will pay very little tax this year, she is in fact getting tax back on her payslip now.

Is she now a non tax payer?
Reason I ask is that we have £25k of savings, which are currently in a Standard Life Offset Mortgage, which we'll be switching in January at the end of its discount period. The plan is to get the cheapest discount/tracker mortgage going & put the savings in her name & pay no tax on the interest.
I wasn't aware of this site when we went Offset, after reading this thread it's clear our numbers didn't add up (£25k savings on £90k mortgage).

If she qualifies & we put the savings in her name, are there any tax implications for me? The whole tax thing is a black art to me!

Cheers

Youreds!

dunstonh

Is she now a non tax payer?

No. The earnings is the amount earned in total over the period of the tax year. It doesnt matter if that amount is paid in one single payment or every month.

Nick_C_4

That is, she'd pay tax on interest for the rest of this tax year, but as of next tax year (from April 6th 2006) she can get interest paid gross.

youreds

dunstonh wrote:

No. The earnings is the amount earned in total over the period of the tax year. It doesnt matter if that amount is paid in one single payment or every month.

Sorry, I meant to add..... if she resigns from her job when her SMP ends after 6 months (Feb '06), is she then a 'non tax payer', or will she become one in April '06, having paid all her 05/06 tax?

Cheers

Youreds!

Nick_C_4

Only from April 6th 2006. She's used up her allowances for this year (the £13K from the job saw to that) - so any interest this tax year would be taxed at 20%.

grumbler

youreds wrote:

Sorry, I meant to add..... if she resigns from her job when her SMP ends after 6 months (Feb '06), is she then a 'non tax payer', or will she become one in April '06, having paid all her 05/06 tax?

No. If her total income in this tax year is more than £4895 she is a taxpayer during whole tax year. If her income is less than £4895+£2090 she pays only 10% tax. As she paid 20% till now, I think she can claim some tax back when this financial year ends.
She becomes a non-taxpayer only from April.

youreds

grumbler wrote:

She becomes a non-taxpayer only from April.

Which brings another question..., we have a joint current account, which will soon be A&L paying 5%, will her 'half' of the interest on that be tax free too?

Youreds!

Bossyboots

Page 4 of this document http://www.hmrc.gov.uk/leaflets/ir111.pdf will answer that. It looks like you will have to check with A&L

Nick_C_4

Yes, if one person on a joint account is a non-taxpayer, filling in an R85 will give you half the interest tax-free.

Bossyboots

Nick_C wrote:

Yes, if one person on a joint account is a non-taxpayer, filling in an R85 will give you half the interest tax-free.

According to the leaflet I have linked to, it is up to the individual banks. If they won't do it, you have to claim the tax back from hmrc yourself.