Will holding savings for my mother incur tax?

RobbieG

My mother lives in Ireland and I am a tax paying UK resident.

My mother wants to get her 10k euros life savings into sterling as she feels it is a safer bet at the moment.

The plan is for me to transfer her euros into one of my savings accounts until she decides what do do for the longer term. My question is: could I be taxed on receiving her savings, ie would the tax man decide it is income?
Thanks for any advice,
R

agrinnall

No, at worst it would be seen as a gift, which is not taxable. You will have to pay tax on any interest made. And you might find the transfer is delayed for a money laundering investigation - not likely but certainly possible.

John_Pierpoint

Strictly speaking you are creating a bare trust on behalf of your mother and should send your mother an annual R185 form to show here how much income the trust has generated on her behalf.
In reality 99% of the time in the UK nobody could be bothered to worry about £8,500 of capital appearing to have been given to you and funnelling the interest back to mum in Ireland.
The Irish end might be concerned, especially if mum's apparent loss of income means she falls out of paying tax and now qualifies for benefits.
Similarly your apparent extra income might effect you right to benefits or the tax band of your marginal income.
Your mum might not think her speculation is a one way bet if she discovers the interest is peanuts, the inflation rate is 5%; the last straw would be a tax take rising to 40% (or 90% odd if you are a benefit claimant).

http://www.x-rates.com/d/GBP/EUR/graph120.html

RobbieG

Thanks for your replies.

my mum is purely interested in finding a safe haven for her savings in case of euro collapse and not bothered at present about interest. She is a non-tax payer as her income is too low.

I am on a salary of £37.5k, so I am worried that if the £10k was to be viewed as income then I would be in danger of tipping into the 40% tax bracket. If it is viewed as a gift and not income, the I guess this isnt a danger?

thenudeone

The £10k will not be classed as income, but the money would be classed as yours for tax purposes and you will be taxed on any interest.