Tax Advice Please

triplea35

I am a PAYE employee currently on the standard rate but will move into the higher tax band if not this year then certainly in the next tax year.
My wife is a non tax payer and most of our liquid savings are in her name and registered for gross income.
We also have a 16 year old son who is registered for gross interest though he does not have a great deal of savings, though we have used his ISA allowance for this year, and ours for the last few.
My wife and I also hold the max in Premium Bonds and the two current NS & I
Index linked saving certificates so have exhausted the tax free savings options.
My 'problem' is that our savings will grow to such an extent this year that interest earned will exceed my wifes allowance. I planned to leave any excess savings in my name but as I will become a higher tax payer this does not seem very efficient.
We have not been requested to complete tax returns for a number of years and would prefer to keep it like that if possible.
Can I balance the wifes tax allowance by having some accounts registered for gross and others left for net or use my sons allowance though it seems difficult to register for good online saving accounts as most seem to stipulate must be 18.
Any advice would be welcome, thanks.

CluelessJock

Morning,

A hearty congratulations on your problem!

As far as I am aware you should not register for gross interest if your income (including interest) exceeds the personal allowance. Check out hmrc.gov for confirmation.

CLAPTON

Using your son's allowances (either personal allowance or ISA) is of course illegal unless you are actually giving him the money.

and your wife can't have some account grosss and some net. Do remember that she will however benefit from the 10% tax band.

markelock

is it not possible to offset interest by paying off your mortgage with the savings?

CluelessJock

To add to markelock's idea, how about an offset mortgage (if they are still available) that way you still have the cash liquid and when grossed up even the lowest rates will be a better return than savings.

McKneff

As Clapton says using your son's allowance is indeed illegal and if he get to
18 he can call all the savings his and you wouldn't have a leg to stand on.
Not saying that he would but it happens in the best of families when cash is involved. It wouldnt take a lot for the taxman to prove the money wasnt his either.

triplea35

Hi, Thanks for your replies. We have had an offset mortgage for years and found it excellent in reducing the interest and helping to pay it off quickly and it now has a zero debt at the moment. We are not 'well off' by any means with just a modest house and car and our savings, a major contributing fact was an inheritance. I am due to retire in two years at age 55 and the savings are intended to supplement our income on retirement and see our son through university etc. The ISA that I created for him this year and the next few years is for all intents and purposes his to pay these fees so I dont feel I am trying to defraud anyone.
My wife does have a non savings income of around £5000 and our savings have been in her name for gross income but will be more than a £1000 pounds this and next year.
Will she have to change all her accounts to net and claim the tax back for the overpayment. Am I correct in assuming she will not pay tax on the first £1000 of savings income and 10% on the next £2230.
Also with me going into the higher tax bracket(just!) is it a certainty that I will now have to complete tax returns again. Thanks

Mikeyorks

triplea35 wrote: »

A) Will she have to change all her accounts to net and claim the tax back for the overpayment.
Am I correct in assuming she will not pay tax on the first £1000 of savings income and 10% on the next £2230.
C) Also with me going into the higher tax bracket(just!) is it a certainty that I will now have to complete tax returns again. Thanks

A) ..... exactly right. If she goes above her PA she has to rescind all R85s

..... spot on again (allowing for a modicum of change in the allowances next year)

C) ..... No. If your affairs are otherwise 'simple' ..... no guarantee you will be enlisted to SA. But you will need to advise HMRC if you keep Savings interest in your name and go HR. They may decide to keep tabs on you via P810 .... which is a very simple one page return - and possibly only issued every 3 years.