Tax on savings

where_are_we

"Eskbanker" - I sympathise with Bank Customer Service workers who need an ever increasing knowledge base. After my transfer of about £5000 from our joint account to my OH`s savings account was refused, I spoke to customer services who then put me through to someone who could facilitate the transfer who then said it had to be authorised by security, and after more than hour (I was glad it was an 0800 number!) I spoke to "security". I was questioned why I was moving this money and I explained it was to get a better interest rate with the added benefit that no tax would be paid on the interest because my OH was a non taxpayer and would benefit from the "starter rate from savings of 0% on first £5000 of taxable income. Because he had never heard of the "starter rate", it was implied that it was somehow "underhand" and a tax loophole! I can`t be the only one moving large amounts to a spouse for tax benefits and because they are large amounts they increasingly would end up being vetted by "security".

I hope this raising awareness of the "starter rate" at a time when more savers (because of much higher interest rates) will exceed their £1000 personal savings allowance for 22-23, will mean more savers take action to benefit from the £5000 0% band.

eskbanker

where_are_we said:

I was questioned why I was moving this money and I explained it was to get a better interest rate with the added benefit that no tax would be paid on the interest because my OH was a non taxpayer and would benefit from the "starter rate from savings of 0% on first £5000 of taxable income. Because he had never heard of the "starter rate", it was implied that it was somehow "underhand" and a tax loophole!

I'd have thought that sticking to the interest-earning potential ought to have sufficed, but that doesn't give an agent the right to cast aspersions about your motives!

where_are_we said:

I hope this raising awareness of the "starter rate" at a time when more savers (because of much higher interest rates) will exceed their £1000 personal savings allowance for 22-23, will mean more savers take action to benefit from the £5000 0% band.

What do you mean by 'this raising awareness', are you referring to the discussion on this thread?

Anyway, I remain convinced that the average poster on here is far from typical of the population at large, so it's easy to perceive things from the perspective of the MSE bubble - I suspect that the majority of the population would not only be oblivious to the existence of this starter rate but wouldn't be anywhere near a position of being able to take advantage of it by avoiding tax on thousands of pounds of interest.... #firstworldproblems

Dazed_and_C0nfused

Because he had never heard of the "starter rate", it was implied that it was somehow "underhand" and a tax loophole! I can`t be the only one moving large amounts to a spouse for tax benefits and because they are large amounts they increasingly would end up being vetted by "security".

I would be more concerned with the fact you have given away about £5,000 😳.

where_are_we

"eskbanker" -  My "raising awareness" relates to the "starter rate". If only a few MSE forumites or their friends and family avoid paying unnecessary tax on their savings interest by reading this exchange then I will be happy.

Who knows where savings interest rates might be next year, which means more and more savers will end up exceeding the £1000 personal savings allowance.

"Dazed_and_C0nfused" - I have given away a lot more than £5000 and I am not in the least concerned! I am very lucky to have such an OH!

RG2015

where_are_we said:

"eskbanker" -  My "raising awareness" relates to the "starter rate". If only a few MSE forumites or their friends and family avoid paying unnecessary tax on their savings interest by reading this exchange then I will be happy.

Who knows where savings interest rates might be next year, which means more and more savers will end up exceeding the £1000 personal savings allowance.

"Dazed_and_C0nfused" - I have given away a lot more than £5000 and I am not in the least concerned! I am very lucky to have such an OH!

Surely HMRC would do this without the recipient having to do anything so their awareness is irrelevant. 

Dazed_and_C0nfused

RG2015 said:

where_are_we said:

"eskbanker" -  My "raising awareness" relates to the "starter rate". If only a few MSE forumites or their friends and family avoid paying unnecessary tax on their savings interest by reading this exchange then I will be happy.

Who knows where savings interest rates might be next year, which means more and more savers will end up exceeding the £1000 personal savings allowance.

"Dazed_and_C0nfused" - I have given away a lot more than £5000 and I am not in the least concerned! I am very lucky to have such an OH!

Surely HMRC would do this without the recipient having to do anything so their awareness is irrelevant. 

They would, whether it be under PAYE or Self Assessment.

But maybe the comment was more about couples moving money between themselves to make best use of the 0% tax rates rather than HMRC systems not recognising them.