Putting savings in mum's name

LionKing

Hi,

I have just sold my flat and have £70,000 in my account (decided to rent!)

To maximise interest on my balance i want to open a high interest account in my mums name (non- tax payer) and put money under her name.

What are the pros/cons here? Are there any legal issues in doing this?

Also - can anyone suggest good investment account. Don't need to touch money for a year

ps i totally trust my mum so no issues there :-)

Thanks

greenface

Is she married ?? If not is she looking

jem16

LionKing wrote: »

What are the pros/cons here? Are there any legal issues in doing this?

Yes it's technically tax evasion as you are looking to avoid paying tax by putting the money into your mother's name.

Aegis

LionKing wrote: »

Hi,

I have just sold my flat and have £70,000 in my account (decided to rent!)

To maximise interest on my balance i want to open a high interest account in my mums name (non- tax payer) and put money under her name.

What are the pros/cons here? Are there any legal issues in doing this?

Also - can anyone suggest good investment account. Don't need to touch money for a year

ps i totally trust my mum so no issues there :-)

Thanks

If you or she die within 7 years of you gifting her the money or of her gifting the money back to you, there may be inheritance tax issues if her total estate is over £312k. There may also be issues if her will doesn't specifically name you as a beneficiary of this amount.

Aegis

jem16 wrote: »

Yes it's technically tax evasion as you are looking to avoid paying tax by putting the money into your mother's name.

It's technically tax avoidance rather than evasion, as it's legal to gift the money. However, the IHT issues mean that the potential tax liability is a lot higher if something goes wrong.

jem16

Aegis wrote: »

It's technically tax avoidance rather than evasion, as it's legal to gift the money.

Providing it's a gift yes.

However as the OP states he wants to

To maximise interest on my balance i want to open a high interest account in my mums name (non- tax payer) and put money under her name.

there is really no doubt that he has no intention of "gifting" the money, merely using his mum's non-taxpayer status to his benefit.

RayWolfe

Aegis wrote: »

It's technically tax avoidance rather than evasion, as it's legal to gift the money. However, the IHT issues mean that the potential tax liability is a lot higher if something goes wrong.

No, I think it's tax evasion.
Gifting between individuals is allowed, but if it is specifically to save tax (spouses excepted), then, I believe, it is evasion. Think about it, would the tax man be happy if we all "gave away" with strings, all out money?
There are, of course, other issues like deliberately depriving yourself of assets, if one or the other require some sort of state help and the IHT issue previously mentioned.

Aegis

RayWolfe wrote: »

No, I think it's tax evasion.
Gifting between individuals is allowed, but if it is specifically to save tax (spouses excepted), then, I believe, it is evasion. Think about it, would the tax man be happy if we all "gave away" with strings, all out money?
There are, of course, other issues like deliberately depriving yourself of assets, if one or the other require some sort of state help and the IHT issue previously mentioned.

I suppose if you give it away and it can be proved that you're retained full control over it, then it would be evasion. If you gave it away with genuinely no access to it, then it would be avoidance.

RayWolfe

I wonder. I suspect that "intention" is the thing. As JEM said, it's not a gift.

edda

Ignoring the legal issues (which others have mentioned), I wouldn't put more than £50k in one account as this is the maximum amount guaranteed in case of problems.

Interest on the cash could tip your mom over into becoming a tax payer - depending on other income. It could also impact on any benefits she may be receiving.

Plus - her age could be relevant. What if she needs to apply for benefits in the next year? Substantial savings in her name could be taken into account.

There are lots of other implications and we've probably only touched the surface (e.g. is she married; any other children or grandchildren; state of her health etc)? I think too many issues which would be too personal to discuss here.

Robert_Sterling_3

I think what you propose is tax evasion.
Your mother might also be a party to tax evasion by you.
Like shoplifting you might get away with it.