Savings and Tax

33 Posts

Firstly I will be getting financial advice but wanted to check the following on here for input
Situation - I am currently a higher rate tax payer who has just stopped work (age 61), my wife does not work and is considered a basic rate taxpayer.
I have savings which we can live off for a few years and a number of pension pots which I intend to draw a small amount from each year.
As of April 2023 when I become a basic rate taxpayer, my wife will transfer 10% of her tax allowance to me, the intention is to draw £14k from a pension fund each year and pay very little tax as my allowance would be 12570 +1257 = 13827
We will be downsizing the house next year as its to large for us now and after purchasing a smaller house I am considering saving the excess (approx £400k) as follows, three or four fixed rate accounts in my wife name and a variable account. If the interest generated in these accounts is around £10k pa and my wife has no other income then this should be tax free as she would be under her personal allowance (12570 - 1257)
Does the above make sense and any suggestions
Situation - I am currently a higher rate tax payer who has just stopped work (age 61), my wife does not work and is considered a basic rate taxpayer.
I have savings which we can live off for a few years and a number of pension pots which I intend to draw a small amount from each year.
As of April 2023 when I become a basic rate taxpayer, my wife will transfer 10% of her tax allowance to me, the intention is to draw £14k from a pension fund each year and pay very little tax as my allowance would be 12570 +1257 = 13827
We will be downsizing the house next year as its to large for us now and after purchasing a smaller house I am considering saving the excess (approx £400k) as follows, three or four fixed rate accounts in my wife name and a variable account. If the interest generated in these accounts is around £10k pa and my wife has no other income then this should be tax free as she would be under her personal allowance (12570 - 1257)
Does the above make sense and any suggestions
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Replies
And you cannot have a Personal Allowance greater than £12,570.
Marriage Allowance is a tax reducer, knocking up to £252 off your income tax liability
The OP is referring to Marriage Allowance: https://www.gov.uk/marriage-allowance
Typically downsizing does not result in as much released equity as you might expect.
When you start looking at smaller houses then they may feel too small. More likely you will want a very nice location to retire to after working hard all your life etc, with a sea view maybe. So the price of the purchase property tends to be higher than first envisaged, especially as you can easily afford to pay more for something nice.
£ 5,000 starter rate for savings
£ 1,000 tax free interest.
£18,570 of earnings or interest per person before Tax is paid.
If interest is over £10k a tax return will need filling out.
Even though no tax will be paid.