Passing savings to a non-taxpayer

Bogof_Babe

sloughflint wrote: »

The way this reads is wrong. You are allowed to gift as much as you like.Also any tax due is not by the recipient.

More info here:
http://www.hmrc.gov.uk/inheritancetax/pass-money-property/exempt-gifts.htm

Sorry, I should have said "without tax implications". Anyway I appear to be misleading people left right and centre, so I apologise for any errors, which are entirely due to my own misunderstanding of how it works.

Going out now, will check this thread later to see if it is all cut and dried by those more knowledgeable!

Andy_Davies

bobsmith85 wrote: »

Hello all, quick question...

I am a standard UK taxpayer (20% or whatever it is these days!) and I am looking into various places to invest my savings. The thought did cross my mind that maybe I could pass my savings onto a family member who is a tax-dodging student to invest for me, not pay tax on the interest, and then get the sum back plus more interest at the end of the term. Now I imagine there are tax rules/laws against this, but I can't seem to find any definitive answer anywhere. I've heard things about inheritance tax 7 year rules, which touch wood shouldnt come into affect, but that aside I've seen nothing to suggest I can't do this. Is there anything stopping me doing this? (or is it just natural bewilderment and paranoia at the UK tax system!)

P.S. I apolgise if this is either blatantly obvious or has been answered before, but its not an easy subject to search for.

I pretty sure that this falls under tax evasion rather than avoidance...

But perhaps the thing you really need to consider is the financial stability of the person your going to give the money to - what happens if they get into debt or need benefits and your money is the thing that stops them?

RayWolfe

Bogof_Babe wrote: »

Hypothetically, if I give you £10K and you invest it, then in a couple of years you say sell a car for £10.5K and give me that money, it could not be proved that it was the same original money, could it?

I think the tax inspectors would have a hard job to prove illegal intentions, even if they suspected dubious motives.

Fraud is always a difficult proposition for the courts. Look at how many cases collapse, but fortunately morality* is a constant for most people otherwise there would be chaos.;)

*Unless you're Mr Madoff, or the AIB CEO or many other bankers or Enron or Robert Maxwell or .... (I'll give up here) but that too, is a whole other story!

bobsmith85

Okay I've read all of the responses to this question and I'd like to thank you all for your input.

It basically seems that I could do it, but it would be illegal. I did initially suspect that would be the case, but I'm glad I asked the question to find out for sure. It makes sense to me morally and if it was perfectly legit I'd be kicking myself for not doing it sooner!

That said I won't be following in the footsteps of Mr Madoff, Mr Maxwell, Mr Becker or Mr Snipes!

Thanks again for the advice.

stphnstevey

Interesting thread

Wonder your thoughts on this - I have become a higher rate tax payer and my wife is not. I pay 40% on savings (when you think about it, thats almost half of the interest!)

I have considered using my wife's allowances, but there has always been a worry in the back of my mind that if anything happened to our relationship, most of the money would be in her name.

But it has occured to me, that if the worsed happened and we divorced, all assets would legally be split 50:50 anyway.

The only real concern s that she might spend it!

RayWolfe

Only you can decide.
... but, in the world that I inhabit such considerations never enter my thoughts. We joke about it but are very old fashioned and consider that we will be together until one of us dies.
But then I was born before civil partnerships and prenuptial agreements and should we split, money will be my last care! Actually, we did agree when we married that what is hers is mine; what is mine is hers. I wouldn't have it any other way.
Perhaps I'm lucky. Perhaps I'm naive. But frankly, my dear, I don't give a damn.

johnllew

stphnstevey wrote: »

I have considered using my wife's allowances, but there has always been a worry in the back of my mind that if anything happened to our relationship, most of the money would be in her name.

No problem. Do what I do: open an internet account in her name and operate it online yourself. That way, you get the tax advantages without the risk of her spending the money. At the first sign of marital disharmony, transfer to your own account; it can be done in seconds.

At any particular moment, my wife has no idea where all the money is; she does trust me completely of course.

Fran

You are considering giving money to a student and expecting it back? :rotfl:

(Sorry for laughing I'm sure the sensible people above have given you enough info.)

Errata

johnllew wrote: »

No problem. Do what I do: open an internet account in her name and operate it online yourself. That way, you get the tax advantages without the risk of her spending the money. At the first sign of marital disharmony, transfer to your own account; it can be done in seconds.

At any particular moment, my wife has no idea where all the money is; she does trust me completely of course.

Unfortunately your suggestion is fraud. Hope you've left your wife some clues in case you get run over by a bus !

johnllew

Errata wrote: »

Unfortunately your suggestion is fraud. Hope you've left your wife some clues in case you get run over by a bus !

Oh I don't know about fraud - I'm acting as her agent with her knowledge and permission. And yes she has access to all the usernames and passwords - it was a bit tongue in cheek.