gifting money to partner (reduce income tax)

cdthomo

Hi MSE forums,

I'm just about to enter the world of work again after going back to university to study medicine. I've accumulated a fair amount of debt and I'm looking to make the most of my salary next year so I can pay this off and support my partner who is studying for a PGCE.

I have read some convoluted information about gifting money to my partner to in effect reduce my taxable income. I think this has a knock on effect for inheritance tax which I'm not worried about as we're both young and healthy (touch wood).

Is this possible? Could someone explain this process if it is? I imagine that I'm taxed normally on my monthly salary then I make some form of declaration to the tax office about money gifted to my partner for a rebate?

edited to add: my partner wont be working at all next year

CLAPTON

cdthomo wrote: »

Hi MSE forums,

I'm just about to enter the world of work again after going back to university to study medicine. I've accumulated a fair amount of debt and I'm looking to make the most of my salary next year so I can pay this off and support my partner who is studying for a PGCE.

I have read some convoluted information about gifting money to my partner to in effect reduce my taxable income. I think this has a knock on effect for inheritance tax which I'm not worried about as we're both young and healthy (touch wood).

Is this possible? Could someone explain this process if it is? I imagine that I'm taxed normally on my monthly salary then I make some form of declaration to the tax office about money gifted to my partner for a rebate?

edited to add: my partner wont be working at all next year

from april 2015 married couples will be able to transfer a 1000 of their tax allowance to a partner under certain limited conditions

however at the moment there is no way of reducing you tax on your income by giving money away to your partner

pjclar02

If you are self-employed, you may, of course, be able to employ your partner and pay them a wage for helping you out with administrative duties. But if you are an employee this will not work

kidmugsy

cdthomo wrote: »

I have read some convoluted information about gifting money to my partner to in effect reduce my taxable income.

I'd choose better reading sources in future if I were you.

Maybe what was meant was that you make the gift and she puts it into an account to get the interest tax-free.

CKhalvashi

If your partner is genuinely working for you, there could be scope to pay them a salary, but you'll then have employers NI to pay.

If it's a joint venture then there's the chance to enter a partnership.

If your partner was to invest in your business, they could take a dividend as part of a limited company.

Noone on this forum is going to advise potential tax fraud.

CK

Laurajo_2

You've got the wrong end of the stick somewhere.

You can gift most things, including money, to partners, which can result in saving inheritance tax, provided you survive for seven years from the date of gift.

If you're employed, I don't believe you will be able to claim tax relief on any 'salary' paid to your partner unless you can prove that you are required to employ your partner as a requirement of your job, which is unlikely, as it would mean that everyone else doing your job would need to employ an assistant too...

zygurat789

CKhalvashi wrote: »

If your partner is genuinely working for you, there could be scope to pay them a salary, but you'll then have employers NI to pay.

If it's a joint venture then there's the chance to enter a partnership.

If your partner was to invest in your business, they could take a dividend as part of a limited company.

Noone on this forum is going to advise potential tax fraud.

CK

You have to pay a fairly high salary for the employers NI to be over £2,000.

CKhalvashi

zygurat789 wrote: »

You have to pay a fairly high salary for the employers NI to be over £2,000.

Forgot about that, thanks!

Out NI bill is a lot higher than that, so thanks for pointing it out!