Putting savings in partners name to reduce tax liability

Tom_Bradbury

Anybody put any of their savings into their wife/husbands name to reduce tax liability where one partner is a Basic tax and the other is a higher tax payer.  Other than the obvious risk of them running off with your money, are there any other pitfalls / things to consider if doing that?  

Flugelhorn

I think people have always done this - you state the only real pitfall!

Dazed_and_C0nfused

There have been some threads where people have given away a house to save some tax.

Same risk applies, it's no longer your money 😳

Keep_pedalling

Dazed_and_C0nfused said:

There have been some threads where people have given away a house to save some tax.

Same risk applies, it's no longer your money 😳

It would be a marital asset though, and it is harder to run off with a house than a bunch of cash 😃

Sg28

Yes its a perfectly legitimate way to reduce tax. Many do it. My wife only works part time so she has a massive allowance of tax free interest. Hence the majority of my savings are in accounts in her name. She's my ISA!

phillw

Keep_pedalling said:
It would be a marital asset though, 

If you transfer pre-marital asset into your spouses name, does it automatically become a marital asset?

Any non-matrimonial property, inherited assets and other assets which were already owned by one party prior to the marriage are called pre-marital assets and are treated as distinct to joint finances for purposes of divorce; as such they will often not be counted as part of the matrimonial pot and may instead be retained in full by the relevant party.

where_are_we

In our situation my OH is a non taxpayer and I am a basic rate taxpayer. OH is over 55 and can contribute £2880 net (£3600 gross) to a SIPP and make a small withdrawal (UFPLS) each year to reach the personal tax allowance of £12570. OH has most of our cash savings in non ISA accounts because she can utilise the starter savings allowance of £5000 interest taxed at 0%. We are helping our children onto the housing ladder which means it is prudent to have a large part of our wealth in cash. With increasing interest rates, many savers are going to exceed the £1000 personal savings allowance and end up paying tax.

mebu60

Sg28 said:

Yes its a perfectly legitimate way to reduce tax. Many do it. My wife only works part time so she has a massive allowance of tax free interest. Hence the majority of my savings are in accounts in her name. She's my ISA!

Does she know the login id and passwords and whose mobile number is on the accounts? 

xylophone

Yes, you can give your wife the money so that she can make the maximum use of her Personal Allowance/ starter rate for savings/ PSA.

I know of  a  couple where the wife 's non savings income is lower than her PA but the husband is a  higher rate tax payer so that they take maximum advantage of her situation.

Johnjdc

The key underlying point I think is that legally you have to put them in a position where they can "run off with the money" if they want to.

Then what you are doing is legal tax avoidance - you have given them a gift of money. Maybe in the future they give you a gift of money back, maybe they don't.

If you just "put it in their name" but have a legal basis on which it's actually still your money, above and beyond the concept of marital assets, then it would become illegal tax evasion.

Exodi

phillw said:

Keep_pedalling said:
It would be a marital asset though, 

If you transfer pre-marital asset into your spouses name, does it automatically become a marital asset?

Any non-matrimonial property, inherited assets and other assets which were already owned by one party prior to the marriage are called pre-marital assets and are treated as distinct to joint finances for purposes of divorce; as such they will often not be counted as part of the matrimonial pot and may instead be retained in full by the relevant party.

I think that the sentence you quoted needs a big asterisks at the end as the matter is complex and courts can still award shares of non-matrimionial assets depending on circumstances. For example, should it be identified that one party could not adaquetely look after themselves with just the split of matrimonial assets.

But even this could be viewed as irrelevant, because in most cases, commingling funds as described in this thread would effectively cause the funds to be viewed as matrominial assets.