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Need to open a Savings Account for my Mum

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  • psychic_teabag
    psychic_teabag Posts: 2,865 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    If she doesn't pay tax (and doesn't expect to in the future) there's no tax advantage in going via an ISA. That said, at the moment, instant-access ISAs are paying slightly more than the gross on most normal savings accounts. But these are all bonus rates, and so will require moving every year, which is possibly something you don't want to be bothered with.
  • efunc
    efunc Posts: 415 Forumite
    Part of the Furniture 100 Posts Combo Breaker
    If she doesn't pay tax (and doesn't expect to in the future) there's no tax advantage in going via an ISA.
    Yes, but isn't there income tax deducted by default on the interest from a normal savings account? the only way to claim it back would be to submit a tax return, which I really don't see her doing. Or is it possible to have her interest paid tax-free?
  • rb10
    rb10 Posts: 6,334 Forumite
    efunc wrote: »
    Yes, but isn't there income tax deducted by default on the interest from a normal savings account? the only way to claim it back would be to submit a tax return, which I really don't see her doing. Or is it possible to have her interest paid tax-free?

    If you inform the bank that you are not a taxpayer (many banks just get you to fill in a form) then they will pay interest without deducting tax.
  • efunc wrote: »
    Yes, but isn't there income tax deducted by default on the interest from a normal savings account? the only way to claim it back would be to submit a tax return, which I really don't see her doing. Or is it possible to have her interest paid tax-free?

    Just download form R85 from HMRC site. Complete it and send it to all the interest-paying banks she uses. They simply pay gross.
  • Annisele
    Annisele Posts: 4,835 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    Although this is done (obviously) with his full knowledge and agreement, and I provide him with statements from time to time, I am unsure as to the legality. I prefer to consider that it is legal, since I know of no crime I (or he) am committing. However, I am pretty sure that somewhere in the bank T&C's would be rules that we are both breaking. It's probably him breaking them rather more than me.

    I can't see how it could possibly be illegal. I'm generalising horribly here, but most offences need two things - some sort of act, and some sort of criminal mindset. For example, if I take a £10 note that belongs to somebody else and don't intend to give it back, that's the "act" of theft. However, if I take it out of my sleeping partner's wallet knowing full well that he'd have given me permission if he'd been awake, I've no dishonest intent - and so I'm not guilty of theft. If I take the money from the wallet of some random person on the tube, I clearly had dishonest intent and so I'm guilty of theft.

    There are a few offences (like speeding) where there is strict liability - so the court doesn't care that you didn't mean to do 50mph in a 30mph, only that you did. However, strict liability offences (again generalising horribly) tend to be things to do with public safety and I doubt you'd fall foul of any. And even if you did manage to fall foul of some law or other...so long as your friend doesn't suffer a loss, I can't see it being in the public interest to prosecute you.

    I think your main risk is if somebody else does something fraudulent with the account. For example, all the money is withdrawn by somebody pretending to be the account holder. The real account holder goes into the branch to complain, and is asked about the history of his account. He says (truthfully) that he's never moved any money using the internet - and then the bank is (quite reasonably) confused about all the money you've been moving about.

    Worse, the account holder might make up some story to cover the fact that you've been operating his account. Once he's been caught out in a lie, it's difficult for the bank to work out when he's telling the truth and when he isn't.

    In those circumstances, the bank might well take the view that if the account holder breached the T&Cs by letting you operate the account, then he likely did something to allow the fraudster access.
  • oldtoolie
    oldtoolie Posts: 750 Forumite
    Your mother has a joint current account which she and her husband manage with cheques. Why doesn't she go to that bank and open a savings account? If she is a tax-payer, it could be an ISA and if she isn't, she can ask for a rebate on the tax taken out. With £1000 to deposit she is looking at £20-40 annual interest, so not worth bothering too much about the absolutely best return.

    There are also many savings accounts managed by post -- see the MSE website. Main problem with these is proof-of-identity meaning you must send ID documents or certified copies of these documents.
  • kidmugsy
    kidmugsy Posts: 12,709 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    I have an idea that I read somewhere that the assumed 50:50 split on a joint account is just a default: that you could register some other split if it were factually correct. So if your mother provided £1000 and you £1, and if the bank or HMRC accepted the facts, and you filled in an R85 for your mother to sign, is that your problem solved?
    Free the dunston one next time too.
  • ceh209
    ceh209 Posts: 877 Forumite
    Part of the Furniture 500 Posts Name Dropper
    I have an idea that I read somewhere that the assumed 50:50 split on a joint account is just a default: that you could register some other split if it were factually correct. So if your mother provided £1000 and you £1, and if the bank or HMRC accepted the facts, and you filled in an R85 for your mother to sign, is that your problem solved?

    Yes and no.

    This is possible for tangible assets, so if it's a house you can be tenants in common rather than joint tenants, and have an unequal split.

    However for bank account interest it's always 50:50 unfortunately.

    (Or so my tax exams have told me so far - please correct me if i'm wrong!)
    Excuse any mis-spelt replies, there's probably a cat sat on the keyboard
  • kidmugsy
    kidmugsy Posts: 12,709 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    Tricky: your tax exams vs my memory of something that I perhaps read in the paper.
    Free the dunston one next time too.
  • efunc
    efunc Posts: 415 Forumite
    Part of the Furniture 100 Posts Combo Breaker
    thanks all. I just opened up a Newcastle Building Society 4.4% saving account in my name instead. It just saves any potential hassle and as the offer was about to close there would have been very little time to go through all the ID verification checks etc for my mother. The money is just what she has been saving to give to charity so it wasn't critical that it was in her name for access reasons. I'll be able to manage it myself. Anyway, thanks again for all the advice.
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