Inland revenue (IR) interest in stoozing?

smartsaver

YorkshireBoy wrote:

I've posted elsewhere today that I've moved £93K off credit cards and through my current account (and brought £30K of it back again) in the last 9 months alone, but my stoozing activities are fully documented - I never throw anything away!

No me neither - good practice

Clariman

Higher rate tax payers need to declare any (non-ISA) savings interest that they have earned so that they pay the additional tax. Stoozing profits are no different to any other savings account interest in that respect, but anyone who thought they might get away without doing so, should think again.

Clariman

smartsaver

Clariman wrote:

Higher rate tax payers need to declare any (non-ISA) savings interest that they have earned so that they pay the additional tax. Stoozing profits are no different to any other savings account interest in that respect, but anyone who thought they might get away without doing so, should think again.

Clariman

Surely if the money has been SBT from Mr SM's card to a joint current account then out to my account as a lower tax earner it should be ok? Or should his stooze pot have been separate from mine in a different savings account? _pale_

It is usual for partners with one paying a higher rate and the other a lower rate to put any savings in the lower tax payers account. Is this illegal in the eyes of the IR?

Odd they have picked on us. Maybe someone at the IR wants to learn about stoozing :whistle:

Clariman

smartsaver wrote:

Surely if the money has been SBT from Mr SM's card to a joint current account then out to my account as a lower tax earner it should be ok? Or should his stooze pot have been separate from mine in a different savings account? _pale_

It is usual for partners with one paying a higher rate and the other a lower rate to put any savings in the lower tax payers account. Is this illegal in the eyes of the IR?

Odd they have picked on us. Maybe someone at the IR wants to learn about stoozing :whistle:

Hi Smartsaver
First of all, my comments were general comments, not at all directed at your situation. I am no tax expert, but my understanding is that it is perfectly OK for a couple to have their savings solely in the name of the lower rate tax payer (or non tax payer).

Whether or not your situation is OK will depend on where the stooz pot interest was earned. If it was earned in an account that only has your name on it, then you are fine. If the account that earned the interest is in joint names, then half of the money is yours (and you pay standard rate tax on half the interest) and half of the money is his (and he should pay higher rate tax on half of the interest). That is my understanding. I dont think it matters what accounts the money passes through, it comes down to which account earned the interest.

Clariman

[Deleted User]

sarahlouise210 wrote:

If the interest received(no tax deducted) is above the tax free allowance - expect a letter!

If an individual holds sevral accounts, do you mean the interest on each account or the total interest amount of all accounts?

HGLTsuperstar

lindabea wrote:

If an individual holds sevral accounts, do you mean the interest on each account or the total interest amount of all accounts?

it will be the total sum of interest you earned that tax year, compared to your personal allowance, so IR will look at all your accounts and come to a grand total

JohalaReewi

Milarky wrote:

If what you are describing is accurate (that the Revenue knowingly inflate estimates) then that makes them the equivalent of 'protection' rackets! I can sort of understand the reasons for giving them sweeping powers - that the state should not run short of money - but it's a slap in the face for manners if they really do behave like that.

Well they do seem to err on the large side when making estimates of income and then charge you tax on the estimate.

ctm_2

JohalaReewi wrote:

Well they do seem to err on the large side when making estimates of income and then charge you tax on the estimate.

Then all you have to do is provide the information that they asked for in the first place that you decided not to give them. Then they will re-calculate using the correct figures that you were legally obliged to provide in the first place, but didn't. They aren't a charity!

Anon

Smartsaver - if you only routed your money through the joint current account it is likely that there will be little interest anyway (in joint names).

Anon

schiff

Just read through this thread for the first time. As a retired HMIT I found it particularly interesting. As always in these matters the situation smartsaver is in poses a lot more questions than answers.
I'm intrigued what form was received in the first place - was it a proper tax return, a letter or something else. The form number would help. Are annual returns normally submitted each year by SS? Is he/she self-employed?
I ask this because the Revenue just do not ask for credit card statements unless a full investigation is already under way, which will mean that it has already been established that the individual is at fault in some way eg. returning a figure of interest received which is a long way short of info the Revenue holds (the banks/building societies DO give the Revenue the figures but they only use them VERY selectively; usually they concentrate on the larger figures - as enquiries have to look as if they might yield a decent sum before they start them up).
IF SS has completed a return form already, then an enquiry could be expected if he has under-declared the interest. But credit card statements, I would have thought, would be somewhere along the line - and not out of the blue as I interpret SS's comments.
I'm also intrigued in what terms the Revenue has inferred that there are 'large sums of money' in SS's bank accounts - surely that implies previous correspondence/information eg a return form with incomplete info in it.
Asking about paying off the mortgage is also a question that isn't just plucked out of the air - there just has to be something before it.
Does SS have an accountant or tax agent - he/she should have if they are self-employed. And he's the man to consult.
Finally, there are no tax problems with stoozing. If you put the money into bank accounts, tax is deducted at source from the interest; only if you are wealthy enough to pay 40% tax are there any other implications. It could never be treated as a form of 'trading' and fall under the tax rules.
To clarify another point, it is completely legit for a couple to so arrange their investment income, so that it is paid in the name of the one who pays a lower rate of tax, or even no tax at all. The capital has to be legally transferred of course, so there might be problems in the event of a separation/divorce when the richer party could find it difficult to get his/her potatoes back!
I don't know if SS wants to add some more detail here - I realise of course that we would be into personal information and I'm in no way looking for that.
But he/she has already given some personal info, so perhaps a limited addition? I might be able to help a bit more in that event.