Help. Tax on savings

ali137

Hi

I am currently working and my wife is a housewife.

If i opened up a savings account in my wife name only and placed £40k would she have to pay tax on the savings?? She does not work.

She is a non tax payer. Does a r85 form need to be sent to the bank??

Is this way legal and allowed??

jem16

ali137 wrote: »

If i opened up a savings account in my wife name only and placed £40k would she have to pay tax on the savings?? She does not work.

Your wife will have a tax free allowance of £8105. If this savings interest is her only income then no she would not pay tax on the interest.

She is a non tax payer. Does a r85 form need to be sent to the bank??

Yes it would. Phone and ask how to register an R85 with them as they are all different.

Is this way legal and allowed??

Perfectly legal and allowed. Technically the money is wholly hers though.

ali137

I know that if i placed the £40k in my own name i would have to pay tax on the interst at a higher rate.

If i place it in her name the £40k in a 2 year fixed at 4% (Listed on Money saving expert) she would not pay tax on the interest received, is that correct.

Will the bank ask how she got that money?? Would it be fine to say from her husband.

jem16

ali137 wrote: »

If i place it in her name the £40k in a 2 year fixed at 4% (Listed on Money saving expert) she would not pay tax on the interest received, is that correct.

The interest would be £1600 and if that is her only income then no tax would be payable.

Will the bank ask how she got that money?? Would it be fine to say from her husband.

If they do ask then yes just say it's from her husband. It's perfectly legal and accepted practice for couples to plan their finances in this way.

She could of course run off with the money as it's hers.

ali137

Thank you for the advise.:j

Hopefully she does not leg it with the money, i trust my wife.:rotfl:

opinions4u

Don't forget to use your cash ISA allowances.

This will ensure money in your wife's name continues to earn interest tax free even if she becomes a taxpayer in future.

Meadows

ali137 wrote: »

If i opened up a savings account in my wife name only and placed £40k would she have to pay tax on the savings?? She does not work.
She is a non tax payer. Does a r85 form need to be sent to the bank? Is this way legal and allowed??

Yes she need to fill in an R85, print of a form and get her to send it to her bank. http://www.hmrc.gov.uk/forms/r85.pdf


Yes it's legal as the money is deemed to be hers (I do it with our money as I am not a Taxpayer), you have no say in the money once in her name so this should only be done by couples that trust each other.

evenasus

ali137 wrote: »

£40k in a 2 year fixed at 4% (Listed on Money saving expert)

Do you have a link for this, as I can't find it on MSE?