Question of the week: Tax on savings

crossleydd42

The ability to transfer savings to the lower earning partner/spouse is especially good for pensioners, who receive a higher Personal Allowance and the female usually receives a lower income than the male and can never, therefore, use up all the allowance.

Mikeyorks

Perhaps a reference to the fact a 10% Savings tax rate still exists for those whose income exceeds their Personal Allowance (PA) - but where interest hits the band formed by PA + £2440 ......... may not have gone amiss?

There's a reference on the main site :-
http://www.moneysavingexpert.com/banking/interest-rates#tax

- but important to reflect it's not just the basic PA of £6475 .... the increase of £2440 equally adds onto the higher age related PA of up to £9640.

Cook_County

Aegis wrote: »

The tax office might ask questions, but probably not. The transfer of assets between spouses is completely tax free and legal in all cases, so this is a matter of tax avoidance (i.e. legal) rather than tax evasion (i.e. illegal), so such questions would be a complete waste of their time.

The settlements legislation is still out there. Although the Revenue lost on Arctic Systems they still my have another go or a future government could bring in retrospective rules against this variety of spousal tax planning.

home_alone

My wife and I have a joint account she gets tax free on her half.

bjorn_again

home_alone wrote: »

My wife and I have a joint account she gets tax free on her half.

My wife became a non-taxpayer in the current year due to earning well below her allowances. How does she go about reclaiming tax paid at source on her own savings and those held jointly with myself?
All help appreciated.

Mikeyorks

bjorn_again wrote: »

My wife became a non-taxpayer in the current year due to earning well below her allowances. How does she go about reclaiming tax paid at source on her own savings and those held jointly with myself?

An R85 is the obvious answer (if you really mean the year ending Apr 2010?) ..... but not all Institutions will apply it retrospectively to interest paid / tax deducted. So you really need to check.
The R85 equally applies to her deemed 50% of joint accounts - but again the operation of this is a bit fragmented. Some Institutions will allow an R85 for only one of the parties - other's won't (mainly because their systems can't handle it). Again you need to either plough through T&Cs - or ring them.

If all else fails - you need to wait until after the end of the tax year and reclaim on R40 :-

http://search2.hmrc.gov.uk/kbroker/hmrc/forms/viewform.jsp?formId=818

bit more general :-

http://www.hmrc.gov.uk/incometax/refund-reclaim.htm

oldfella

If all else fails - you need to wait until after the end of the tax year and reclaim on R40

---

not necessarily - if you have received the savings with tax deducted and you know what your taxable income in the tax year will be, then you can submit the R40 now. I did it last year and got the money back in January, 3 months before the end of the tax year.

bjorn_again

Mikeyorks - Yes, her birthday was in January 2009, and so it was 2008-09 Tax Year that I was referring to.
Thanks for your help.

home_alone

My wife retired this year and after speaking to the Inland Revenue it was decided that any tax already paid this year we would wait until the end of the tax year and then claim back. Our new joint account has only just started and the inland revenue suggested we talk to Saga (fixed account is with them) and get them to adjust my wifes half so no tax will be paid, this I did with no problems, you just agree to declare that she is a non tax payer, a letter stating that will be sent to you.

gary