Higher rate vs standard rate tax - help!

Chillo

Hi,

first post here, so ple be gentle with me :eek:

I have been a higher rate tax payer (just made redundant) :mad: my wife is a standard rate tax payer (or possibly just under the tax threshold).

I'm looking to transfer my redundancy money out of my current account into a higher rate savings account.

If I open a higher rate account in my name, I understand that I will pay 40% tax; if I do this in my wifes name, she will pay 20% tax.

Is this correct, please?

Any

That is correct.

However, consider whether you already hit the 40% earning rate bracket as it is only November so you actually only worked 8 months of the tax year? If you already have new job lined up it's no brainer - your assumption is correct. Or if the redundancy sum is very high.

Some people warn that also if you put it in your wife's name then the money will be seen as hers in case she wanted to run off with it.

I personally think that if you cannot trust your own spouse then the marriage is already over and she would most likely get the money in divorce anyway:rotfl:

Chillo

Any wrote: »

That is correct.

However, consider whether you already hit the 40% earning rate bracket as it is only November so you actually only worked 8 months of the tax year? If you already have new job lined up it's no brainer - your assumption is correct. Or if the redundancy sum is very high.

Some people warn that also if you put it in your wife's name then the money will be seen as hers in case she wanted to run off with it.

I personally think that if you cannot trust your own spouse then the marriage is already over and she would most likely get the money in divorce anyway:rotfl:

Thanks Any,

I think I trust her by now; she's done ok over the past 23 years :rotfl:

I aim to be in paid work in the next week or so, so I'll put the money in her name and give her a good long stare.