Savings with friends

Eco_Miser

Kim_13 wrote: »

The money in the account would be counted as yours were you to apply for means tested benefits or be chased for money for whatever reason. If you have a significant emergency fund of your own which would exclude you from benefits/cover any unexpected bills, then ending the arrangement would not be so urgent - though something to consider as if you did fall on hard times, use up your emergency fund, return their money and claim benefits, it may be seen as a deprivation of capital case. You could of course explain in such a case where the money came from, but whether the explanation would be accepted is another matter.

However, the OP owes a debt to the other members of her group, which is well documented, so there should be no question of deprivation of capital. In the event of other creditors making a claim however ...
These are just hypothetical examples of what could go wrong.

Scottish_Lassie

Thanks for that Kim_13, Wobblydeb and Peaceful few more things to consider there as well I think... sounds like I need to have a Finance Meeting with the girls and decide what the best way forward for the account so that we're all covered!


Many thanks for all your replies

colsten

It's probably not an issue now that we have the personal interest allowance and interest rates are in the doldrums but it was before: you are paying the tax on any interest as the account is in your name.

alanq

What is the benefit of the current arrangement? Why cannot each individual open their own "celebrations" savings accounts and dip into them as and when required thus avoiding all the complications?

Scottish_Lassie

You're right alanq, we could do it that way.


We've chosen to do it this way as it currently suits our needs. The girls like the fact that the money is "away" and not as easily accessible so making it easier for them to save.. The girls can obviously get their money out whenever they want of course but its a bit more involved than just going into your own account.


It does make it easier for paying for hotels/travel/meals whatever, we don't all live near each other and meet up twice a year or so. So from that point of view it makes it easier but obviously we need to consider all the above points to see if will still benefit us all in the long run.

ffacoffipawb

d70cw6 wrote: »

that money is all yours - spend it all on hookers and blow imo.

Lucky imo 😄

bowlhead99

colsten wrote: »

It's probably not an issue now that we have the personal interest allowance and interest rates are in the doldrums but it was before: you are paying the tax on any interest as the account is in your name.

However if that's a problem you can sign an agreement between you all that the contents of Scottish Lassie's account are held on trust for each of you in proportion to your respective contributions - and then it would be clear that the money (and interest received) was not beneficially yours even though it was legally yours.

As such, the income would not be yours alone and the tax bill is not yours, but you would have an obligation to tell everyone what their share of the apportioned interest was each period, so they could take it into account for their own tax computations.

Of course, most banks will have a clause in their personal account t&c which says that you must not open or use a personal account for someone else (including as trustee or personal representative) or for a club etc without their consent.

But your violation of the banks rules is between you and the bank rather than being something that changes the position for HMRC (though they might need convincing when they receive the periodic bank reports on how much interest "you" received from the bank and you don't put it all on your tax return.

Malthusian

Scottish_Lassie wrote: »

We've chosen to do it this way as it currently suits our needs. The girls like the fact that the money is "away" and not as easily accessible so making it easier for them to save.. The girls can obviously get their money out whenever they want of course but its a bit more involved than just going into your own account.

I'm surprised that three girls of whom two are accountants have so little confidence in their ability to not blow their money.

It does make it easier for paying for hotels/travel/meals whatever, we don't all live near each other and meet up twice a year or so. So from that point of view it makes it easier but obviously we need to consider all the above points to see if will still benefit us all in the long run.

I'm sceptical about that. Usually with this kind of arrangement one person will work out how much everyone needs to pay for hotels and flights, tell everyone how much to transfer to them and then pay for it. Admin only arises once when you go on holiday, whereas at the moment admin arises constantly as people pay in (plus you need to keep updating them).

Meals can be sorted either by going Dutch, or by everyone chucking a few notes into a kitty at the start of the holiday and then paying out of that.

Each to their own but for me there is too much risk of disputes arising over the money and not enough benefit.