Can I save for my brother?

nicenicky

Hello, I am new here and looking for some advice please

My brother has had some financial difficulty in the past and is struggling to make things work. He has a lodger and has asked if I would take the rent from the lodger and keep it safe in a savings account for a few months so that he doesn't spend it. (previous spendaholic/gambling issues etc)

My question is - can I legally save money on someone else's behalf without tax implications on him or me, or me having to fill in endless forms or open trust funds etc, he wants me to save and hold up to £4k for him. I was hoping I could simply open up a regular saver and pop the money in there until he wants it... ?!

Any advice/experience of this greatly appreciated
Thank you!

eskbanker

If you put it in a saving account in your name then it's regarded as your money, so you'd be taxed on interest income, it would be seen as your capital for, say, means testing, and he'd have no claim on it if you were to die, for example. The likelihood of each of these being significant or even relevant, especially at £4K, would seem low (in the absence of any other details), but worth bearing in mind if you're looking for the legalistic view rather than the pragmatic....

JohnRo

As above, as long as he isn't avoiding any taxes due on his economic activity or intentionally depriving himself of assets to cheat a potential means tested benefit entitlement, either now or in future, then he can give you any amount he chooses for you to do with as you please.

IHT rules could become a factor depending on the eventual estate sums and time scales involved.

xylophone

Your brother can lend you the money - you could draw up and sign an agreement on a repayable on demand basis.

nicenicky

Thanks very much to you all!

newuser78

Why can your brother not open an account in his name but you keep the card, pin, password, etc?

teddysmum

He could put the money into a bond which charges a high penalty, for early termination, meaning he'd take out less than he put in.

Malthusian

newuser78 wrote: »

Why can your brother not open an account in his name but you keep the card, pin, password, etc?

If he has serious self-control issues then he could still ring the bank up, or walk into a branch and withdraw the money, or use the "lost password" system to gain access to the account. Whether or not he has the card, PIN etc does not change the fact that he would be entitled to his money.

Just as if you forget the password to your online-only bank account, it is still your money, you don't forfeit it to the bank. How the bank satisfies itself that you are the owner despite the lack of the password is between you and it.

To reiterate the answer for the OP, no, there aren't any tax implications other than that you would be liable for any tax on the interest. (Only an issue if you're above your personal savings allowance, and if you are you just deduct it from the amount you owe him.) For an amount like this I would happily stick my brother's money in a bank account and scribble a handwritten IOU to be signed by both of us.

teddysmum wrote:

He could put the money into a bond which charges a high penalty, for early termination, meaning he'd take out less than he put in.

The problem is that he expects to withdraw the money in "a few months" - not for gambling purposes. So a fixed term bond is not suitable. In any case if you were going down this route you might as well choose one that allows no access whatsoever except on death, otherwise he might still be tempted to withdraw and pay the penalty. But as the brother is likely to want access to the money this is a moot point.

LHW99

Why not open a joint account that needs both to sign?

bigfreddiel

teddysmum wrote: »

He could put the money into a bond which charges a high penalty, for early termination, meaning he'd take out less than he put in.

If someone has problems with money, debt then a penalty taking it out will not have any affect. It's like an addiction fj