Baby Coming - Bit of Financial Planning

Patiokev

Hello, I would really appreciate some simple advice please.

My wife is due to give birth in May next year (She is currently a higher rate tax payer and I am a lower tax payer for the 2007-2008 tax year).

However due to a job move, for the 2008-2009 tax year I am likely to become a higher tax rate payer and she will become lower rate as she wants to go part time.

Is it legitimate just to transfer any savings, shares, investments etc that are currently in my name over to her or is this seen as tax avoidance and also when would we be best to time these transfers ?

Any advice much appreciated...........Thanks

jem16

Patiokev wrote: »

Is it legitimate just to transfer any savings, shares, investments etc that are currently in my name over to her or is this seen as tax avoidance and also when would we be best to time these transfers ?

Any advice much appreciated...........Thanks

Perfectly legal. You are avoiding tax not evading it which would be illegal.

Wait until April 6th 2008 and then move them.

Patiokev

Thanks Jem, much appreciated, will action next year assuming all goes to plan.

dunstonh

If you are going to be in receipt of childrens/working tax credits, then remember that pension contributions in your name will not only benefit from higher rate tax but will also reduce your declared income for tax credit purposes and can increase the amount of effective tax relief you get.

In the best scenario, you can get an effective tax relief rate of upto 72%. Which means if you take your 25% Tax free cash at retirement, your pension has only cost you 3% of the amount put aside with the Govt paying 97%.