Married couple - how best to save?


First post, so bear with me :)

Hubby and I are saving as hard as possible to get a house deposit, after having to sell our last place (evil neighbour) and getting married in the meantime and using all savings to pay off debts. We are now debt-free but low on a house deposit yet!

I've been reading about moving savings into the lower tax payer's name in a marriage. This is now important to us as I will be moving into the 40% tax bracket with a promotion from March. My husband is in the 20% bracket. All savings are currently in my name (historically from before we married) or in joint names.

Please could someone point me in the right direction of information on this subject, as I'm a bit confused by the HMRC info :(

Stupid questions:

- How do banks etc know what tax band I am in? Does this all feed through to HMRC somehow? Or am I meant to tell the banks I have existing accounts with?

- There is no way we would earn more interest in a year between us than the personal savings allowance - so am I getting confused over something I don't need to worry about?

- I plan to use an ISA a year, should I get this in my husband's name, or am I okay to do it in mine as our total savings interest is lower than the HMRC threshold?

Thanks so much,



  • YorkshireBoyYorkshireBoy Forumite
    31.5K Posts
    Part of the Furniture 10,000 Posts Name Dropper
    Your bank will assume you're a tax payer if you don't tell them (via form R85) that you're not. They'll deduct 20% tax from your interest, and tell HMRC what they've done. You (also) tell HMRC (via your tax return) how much interest you've received. If you're a 40% tax payer they'll adjust your tax code to reclaim this additional 20%.

    It (usually) makes sense for everyone to use their ISA allowance first, before saving in other accounts.
  • L0llyL0lly Forumite
    3 Posts
    Eighth Anniversary Combo Breaker
    Having read more, I now realise the savings threshold doesn't apply...
  • L0llyL0lly Forumite
    3 Posts
    Eighth Anniversary Combo Breaker
    I've never done a tax return before, so I thought I'd check if I will need to do on next year - looks like not as salaried income beneath the limit, and income from savings also below the relevant limit.

    I guess then that HMRC will adjust my tax code to correct for the extra 20% on savings income without me completing a tax return. Does that sound right?

    Sounds like opening an ISA a year in my husband's name will do the trick :)
    41.9K Posts
    10,000 Posts Combo Breaker
    an ISA is tax free so it doesn't matter whether you pay tax at 20% 40% or 50% and you don't need to declare it to HMRC.
    the current allowance is 5640 so best you both use your ISA allowance before any other savings a/c

    once you are a 40% tax payer i.e. earn more than 42,475 pa (after pension payments) then you need to tell HMRC about any interest you earn (excluding ISAs of course) and pay the extra tax.
  • jimjamesjimjames Forumite
    16.5K Posts
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    L0lly wrote: »
    Sounds like opening an ISA a year in my husband's name will do the trick :)

    Open cash ISAs in both your names and you'll get over £20k of tax free savings by mid April 2013. Use S&S ISAs as well and that's over £40k of tax free allowances you can make the most of.
    Remember the saying: if it looks too good to be true it almost certainly is.
  • opinions4uopinions4u PPR
    19.4K Posts
    Married couple - how best to save?
    I find not being completely honest is the best way.

    I save it.

    She spends it!

    If she doesn't know I've saved it, she can't spend it!
  • atushatush Forumite
    18.7K Posts
    Part of the Furniture 10,000 Posts Name Dropper
    that sounds a poor marriage lol.

    They should use their cash ISAs, and fill them regularly then put any extra into the BRTaxpayers name until the next round of ISAs.

    Once you have your deposit, as a HRTpayer I would look into increasing pension contribs.
  • royal23royal23 Forumite
    88 Posts
    note you don't need to do a tax return, you can simply ring HMRC and tell them the extra amount.

    i'm a 40% tax payer and so i rang them up in May, and told them about the extra income from interest, for the previous tax year.
    they will then send you a letter and will start taking the due tax in the NEXT tax year via PAYE.

    of course you can do a tax return, but if interest is your only income stream outside of work salary (which is taxed PAYE), then just ring them and tell them.

    i find that's the easiest way.
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