Tax-free savings for stay-at-home parents/spouses

BrandNewDay

Being new to the UK, it took me a little while to figure out that I don't need to save my money in a cash ISA: I earn very little so I don't pay tax. Duh!

But! It gets better. I went into Bank of Scotland and asked for a copy of the form R85 to get my web saver to be tax-free. (I use this instead of another online account because it's super-duper easy, being as I switched current account to BOS from Barclay's when they were offering £100 and, anyway, they're the only bank in town.) I asked about the high-interest current account (over 6%) and I specifically asked, "Can *that* be interest-free, too? Because the money paid in is my husband's salary? I mean, wouldn't that be cheating?" The lady said, "Is your name the only name on the account? If so, then no problem!"

So! If one of you is staying at home or only working part-time, and therefor qualifies as tax-free, then I guess you can have ALL the money in your name, alone, and get tax-free interest. It sounds crooked, but I guess it isn't.

debbie42

It certainly isn't crooked. You do need a trusting spouse, of course ;-)
I'd also be careful and keep very good records.

jennifernil

That is what we do too. Oh earns it and I save it! Our current account is joint though. Better check first if your husband's employer will agree to pay his wages into your account. OH needs to be able to withdraw money too, so we have the one joint account.

I do also have an ISA as some of the rates are good, and one day I might be a taxpayer.

BrandNewDay

jennifernil wrote: »

That is what we do too. Oh earns it and I save it! Our current account is joint though. Better check first if your husband's employer will agree to pay his wages into your account. OH needs to be able to withdraw money too, so we have the one joint account.

His salary has always been paid into my account. And, he can withdraw money with my card whenever he wants. It's totally "our" money. That's not a problem.
I'm really thrilled to see that this is perfectly alright and legal! Whoohoo!

masonic

BrandNewDay wrote: »

he can withdraw money with my card

You'd probably find that your bank would object if they learnt of that, but him giving you the money to save, and you giving it back when he wants is not a problem.

Biggles

masonic wrote: »

You'd probably find that your bank would object if they learnt of that

They most certainly would; you would find yourselves in big problems with them if they found out he was using your card. You may even lose your account.

Much better that he opens a new account with the same bank. You can then transfer money instantaneously between accounts to avoid losing interest.

Either he has his salary paid in there and siphons off savings to your account, or his salary continues going where it is now and you siphon off spending money to his account.

Keep it above board, it'll even be more convenient in the long run.

cheerfulcat

BrandNewDay wrote: »

So! If one of you is staying at home or only working part-time, and therefor qualifies as tax-free, then I guess you can have ALL the money in your name, alone, and get tax-free interest. It sounds crooked, but I guess it isn't.

Of course it isn't " crooked "; you are perfectly entitled to earn money up to your basic allowance without paying tax, whether interest, dividends or " earned income ". But it costs nothing to use cash ISAs, and nothing or very little to use S&S ISAs, and you never know when your circumstances might change. The same goes for your husband, of course!

Jonbvn

Myself and my OH do exactly the same thing. Remember that the basic allowance is presently just above 5k. Therefore, with most savings rates around 6%ish once your savings pass approx 90k you will be liable for tax on the interest.

Also like you, we invest in ISA's because the rates are good, and you do not even have to mention them on your tax return.