Tax on Savings 6 December 2022 at 11:32AM in Savings & investments 13 replies 367 views

BJS70

Hi All,  my wife does not work and has no income, we live on my Army pension, would she have to pay tax on the interest earned if she earned over the £1000 threshold?
many thanks for any advice or help.

xylophone

Your wife has no income at all?

Then she is eligible to receive up to  £12, 570 + £5000 + £1000 in savings interest before being liable to tax.

https://www.gov.uk/apply-tax-free-interest-on-savings

Dazed_and_C0nfused

It's almost certain that she cannot benefit from the £1,000 threshold.

That is only available once she has used her Personal Allowance and the savings starter rate (up to £5,000 taxed at 0%).

So unless she has interest in excess of at least £16,310 the £1,000 amount is totally irrelevant to her.

BJS70

Many thanks for the replies, i just wanted to check that she would not need to contact HMRC or pay tax, whilst it is ‘our’ money she will be investing and I know it will be ‘her’ money in the eyes of the law I don’t think she has any plans to pack a case and run off with the milkman!  (I hope).

spider42

Not directly related to your question, but are you taking advantage of the Marriage Allowance? As long as you are a basic rate taxpayer (higher rate or additional rate taxpayers aren't eligible), then your wife can surrender 10% of her Personal Allowance to you, and you then get a £252 tax reduction. Claims can also be made for 18/19, 19/20 and 20/21 tax years (slightly lower amounts for earlier years).

Dazed_and_Confused's figure of £16,310 is assuming you have already done this, but it is worth double checking that you have.

Bigwheels1111

She can get £18,570 of tax free interest.

But if she gets more than 10K a tax return is needed.

No tax to pay, just paper work.

Albermarle

Tax-free savings: check if you're eligible - Money Saving Expert

BJS70

Thank you for this info.  I am a basic rate tax payer and when I worked as a self employed photographer I did use the marriage allowance via my accountant, I closed the business over 3 years ago and haven’t used the MA since then.  Do I just contact HMRC or my pension provider?

thanks again for the help!

Dazed_and_C0nfused

BJS70 said:

Thank you for this info.  I am a basic rate tax payer and when I worked as a self employed photographer I did use the marriage allowance via my accountant, I closed the business over 3 years ago and haven’t used the MA since then.  Do I just contact HMRC or my pension provider?

thanks again for the help!

Neither, you cannot "claim" Marriage Allowance (it would cause a lot of grief with people able to make their spouses pay tax!).

Your wife needs to apply if you no longer get the benefit of it.

BJS70

Many thanks, I’ve just found the info on here and I’ll get my wife to apply.  So glad I joined the forum, thank you for all the replies.

BJS70

Just reading through the bumf on marriage allowance, and it says once you have applied (which she did when I was self employed) there is no need to reapply, so I may already be getting it?  I’ll get her to call HMRC to confirm.