ISA for house wives (or husbands)

suresh505

I'm new to this website and I find the information here very helpful.

I'm employed and my wife is a homemaker. I've put 15000 pounds in my ISA account that I opened this year.
I've some more money at the moment that I plan to invest in ISA too.

Can we open an ISA account for my wife and invest in it?
My wife is not employed and she has no income at all. Are there any tax implications if we open an ISA account in my wife's name and invest money in it?

badger09

suresh505 wrote: »

I'm new to this website and I find the information here very helpful.

I'm employed and my wife is a homemaker. I've put 15000 pounds in my ISA account that I opened this year.
I've some more money at the moment that I plan to invest in ISA too.

Can we open an ISA account for my wife and invest in it?
My wife is not employed and she has no income at all. Are there any tax implications if we open an ISA account in my wife's name and invest money in it?

Assuming your wife, like you, is resident in UK for tax purposes, and hasn't already subscribed to an ISA since 6th April 2014, then she can certainly open an ISA in her own name and you can pay up to £15k into it.

The money in the ISA however becomes hers

Vortigern

suresh505 wrote: »

Can we open an ISA account for my wife and invest in it?
My wife is not employed and she has no income at all. Are there any tax implications if we open an ISA account in my wife's name and invest money in it?

You can do exactly what you're proposing and there are no tax implications but....

A much better idea would be to open one (or more) of the high interest current accounts in your wife's name. As a non-taxpayer she could register form R85 to receive interest without deduction of tax.

She could get up to 5% tax free. What would she get in an ISA?

badger09

Vortigern wrote: »

You can do exactly what you're proposing and there are no tax implications but....

A much better idea would be to open one (or more) of the high interest current accounts in your wife's name. As a non-taxpayer she could register form R85 to receive interest without deduction of tax.

She could get up to 5% tax free. What would she get in an ISA?

OP used the term invest, so may be considering S&S ISA.

suresh505

badger09 wrote: »

OP used the term invest, so may be considering S&S ISA.

Yes, that's right. Thanks.

suresh505

badger09 wrote: »

Assuming your wife, like you, is resident in UK for tax purposes, and hasn't already subscribed to an ISA since 6th April 2014, then she can certainly open an ISA in her own name and you can pay up to £15k into it.

The money in the ISA however becomes hers

Thank you badger09. I trust her .

A follow-up query on that:
Let's say I need the money after a few years. If she withdraws the money from her ISA account and gives me the money (by depositing into my bank account), will there be any tax implications at that time?

Do I need to show that as an income of any kind at that time?

Archi_Bald

I believe that as long as you are married to each other, it is a gift between spouses and not taxable. Just like you giving her money to deposit into an account in her name is a tax-free gift.

But don't take my word for it - confirm with your tax consultant or HMRC

suresh505

Archi_Bald wrote: »

I believe that as long as you are married to each other, it is a gift between spouses and not taxable. Just like you giving her money to deposit into an account in her name is a tax-free gift.

But don't take my word for it - confirm with your tax consultant or HMRC

Thanks Archi Bald. I couldn't afford a tax consultant and hence came here, LOL.

On a serious note, HMRC website says that gifts between spouses are exempt from tax - however, it also mentions that the annual exemption limit is £3000.

(apologies, I'm new to this website so I couldn't post links)

(www).hmrc.gov.uk/inheritancetax/pass-money-property/exempt-gifts.htm#1

Does anyone know if the annual exemption limit applies to spouse?

Archi_Bald

Would you seriously take tax advice from a bunch of strangers on the internet? You can call HMRC for free advice if you don't want to pay a tax consultant.

xylophone

http://www.which.co.uk/money/tax/guides/inheritance-tax-explained/inheritance-tax-planning-and-tax-free-gifts/

suresh505

Archi_Bald wrote: »

Would you seriously take tax advice from a bunch of strangers on the internet? You can call HMRC for free advice if you don't want to pay a tax consultant.

Thanks, that's a good idea. I didn't know about it before.