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Should we open ISA in mine or hubby's name
MrsBish
Forumite 30 Posts
Hi,
We need to open an ISA and get saving. I know I've read somewhere that it's best to open it in the name of the higher rate tax payer OR the non-tax payer. I just can't find where I read that now and can't remember which way round it said.
Should we open it in his (higher rate tax payer) or mine (non tax paying) name.
Thanks
We need to open an ISA and get saving. I know I've read somewhere that it's best to open it in the name of the higher rate tax payer OR the non-tax payer. I just can't find where I read that now and can't remember which way round it said.
Should we open it in his (higher rate tax payer) or mine (non tax paying) name.
Thanks
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Replies
So, who do you think would benefit more from that -
- your husband, who usually has to pay income tax on the income that he makes?
- or you, who doesn't pay income tax on the income you make anyway?
Clearly, it is something that would be valuable to him and not very valuable to you unless you become a taxpayer further down the line. But as "apt" says, if you don't pay tax anyway you just want to get the best rate possible, which is probably found in a good current account (Nationwide, TSB, Lloyds, Santander, Tesco etc )
Why do you need an ISA? I.e. why is an ISA the right vehicle? Cash ISA or S&S ISA?
What are your objectives for saving?
A pension for you might be a good idea too:do you expect to be a taxpayer in retirement? If not, consider contributing the permitted £3600 p.a. gross = £2880 net.
I suppose we have two reasons for saving and maybe two types of accounts required.
1, home improvements/holidays etc - this would need to be relatively accessible, but not too easy or I'll spend it on new shoes!
2, longer term savings as we have NO savings at the moment. This could be locked away to a certain degree.
However, you may feel it's not worth your while opening and managing a couple of additional current accounts for what is a very small return, ie the difference between 1.6% and 5% on an average balance of £1,500 (less if you need new shoes!) is only £51 a year...or £1 a week.
The cash savings would best be kept in interest paying current accounts and regular savers in the wife's name, as she can receive the interest gross (after filling in an R85 per account). Achieving the minimum monthly deposits and any required DDs should not be a problem as anyone can cycle the required amounts through the accounts and set up the required DDs (see the threads on those accounts for details).
When the cash fund for holidays and emergencies etc has reached the required balance, other / additional options should be explored and implemented, alongside maintaining instant access cash funds. This could include longer term investments in S&S ISAs and should definitely include increased pension contributions, for both.
The husband should, however, immediately investigate increased pension contributions, for two reasons: there might be tax savings, and there might be additional employer contributions.
It should also be investigated whether the monthly savings amount can be higher.
I suggest you spend a month discussing and investigating what to do. Then read the coverage of the Chancellor's Autumn Statement in early December. If he says nothing that might change your mind then fire ahead with your decisions.