TAX problem for £30k in my name for short term?

northernireland

Hi everyone, this is my first post here altough I have been a reader of several of the MSE forums for some time and have gleaned some excellent information from them.

I have a potential problem as outlined below which I may need some advice. I hope I have posted in the correct section, feel free to move it if I haven't.

I have an aunt with no immediate family of her own and she is currently going through a messy seperation from her ex-husband which may involve a court case.

A few months ago all financial affairs, documents, bank statements etc were disclosed to both parties solicitors to argue the settlement and see who gets what. Since that, my aunt has received a surprise cheque for nearly £30k from an inhertitance from a deceased relative. IHT has already been paid on this money so the TAX on it is not an issue.

Obviously she doesn't want her ex-husband to be aware of this money in case he decides to pursue a share of it, and her solicitor has told her to keep it quiet until the case has been settled. She has asked me if it would be possible to put the money in an account in my name, or a joint accont with her name. The cheque is made out to her name so probably would need to be a joint account with her name and mine so the cheque could be paid in. Once the case is settled, then she can withdraw the money and do whatever with it.

What TAX or other implications does this have for me? The money is strictly speaking not mine, but basically just a 'lend' (altough I won't be touching the money at all) until such times it is 'safe' for her to have it solely in her own name. I am guessing this will be about 6 more months and the cheque was issued in October/November 06 so if she waits until they are settled before lodging the cheque, the cheque will possibly be out of date. I have suggested to her that it might be an idea not to do anything with it and even if the date runs out on the cheque just get the solicitors who issued it in the first place to write her another cheque but she doesn't want to do this.

Sorry for the long winded story but I wanted all the background information here to put the question into context. If any more information is needed please ask and I will try and get it.

Thanks in advance

PS My wife and I are both normal rate taxpayers and so is my aunt to whom the question relates if that makes any difference.

jem16

If the £30k was paid into an account paying 5% interest then that would be £1500 over the year. Half of that interest would be yours(assuming joint account) so £750. For 6 months that would be £375. As savings interest is paid net of tax at 20% you would get £300 interest.

This £375 would then be added onto your taxable income for the year. If that pushes you into the higher rate tax bracket ( earn more than £38335 gross ) then you would be liable for extra tax.

If it does not put you into HRT then no more tax is liable. I can't think of any other implications of you having the money.

Obviously if it's paid solely into your name it would be £1500 - will this put you into HRT?

bnoc

I may be missing the point here but if all financial affairs, including bank statements, have already been disclosed then why not simply pay the cheque into one of her own accounts?

If all of her accounts are currently joint accounts with her ex-husband then couldn't she open one in her sole name and put the money in there?

As I say, I've probably missed the point.

Cook_County

This is not a tax question but a legal one, but she needs to speak to her solicitor before her ex-husband discovers under oath in Court that she has more assets than she said.

oldwiring

Cook_County wrote:

This is not a tax question but a legal one, but she needs to speak to her solicitor before her ex-husband discovers under oath in Court that she has more assets than she said.

Are you suggesting that perjury could occur, if the lady stated that the declared assets were truly all she had? And what of OP; could he be aiding and abetting a deception?

oldwiring

Cook_County wrote:

This is not a tax question but a legal one, but she needs to speak to her solicitor before her ex-husband discovers under oath in Court that she has more assets than she said.

Are you suggesting that perjury could occur, if the lady stated that the declared assets were truly all she had? And what of OP; could he be aiding and abetting a deception?

RayWolfe

oldwiring wrote:

Are you suggesting that perjury could occur, if the lady stated that the declared assets were truly all she had? And what of OP; could he be aiding and abetting a deception?

Is there a deception occuring here in or out of a court? I would say so.

northernireland

Thanks everybody for your replies.

The question was not whether it was a deception in or out of court but just what TAX I may be liable for if the £30k was jointly in my name.

I think my question has been answered but any more replies greatly appreciated.

Thanks and regards.

northernireland

Any more suggestions about TAX liability greatly appreciated.

Thanks

Cook_County

There is no tax adviser in the UK who would provide advice where the person asking the question knew that facts were to be kept from the Courts. I suggest you consult your solicitor before you find yourself in Court.

kelloggs36

I would think that only tax on the interest would be payable so you would benefit from it as it isn't income?? I don't know for sure though, it will depend on your financial circumstances.

No fraud though - as at date of decleration she did not have cheque and so could not have declared it. Only becomes an issue if there are terms that state that all income subsequent to that date must also be declared.