Transfer of savings to spouse who is not working 3 February at 11:24AM in Savings & investments 8 replies 322 views

funnynamegoeshere

I'm in the 40% tax bracket and my wife is not working.
Can I transfer savings into a sole account in her name and therefore avoid having to pay tax on interest up to £17,570 (Personal Allowance + Starting rate for savings) ?
Or are there HMRC rules to prevent this ?

Albermarle

You can give your wife as much money as you like, with no tax implications. The only thing to be aware of is that it is then legally her money and she might not give it back !

Same question gets asked regularly.
Putting savings in partners name to reduce tax liability — MoneySavingExpert Forum

MX5huggy

She also gets the £1000 personal savings allowance making £18570.

Don’t forget her Dividend allowance her CGT Allowance, she can put £20k in a ISA and £2880 in a Pension (grossed to £3600) and hold £50k of Premium Bonds. 

But you should be making pension contributions to get you back to under £50k especially if you have children and could claim Child Benefit. 

Dazed_and_C0nfused

funnynamegoeshere said:

I'm in the 40% tax bracket and my wife is not working.
Can I transfer savings into a sole account in her name and therefore avoid having to pay tax on interest up to £17,570 (Personal Allowance + Starting rate for savings) ?
Or are there HMRC rules to prevent this ?

No.   But it's no longer your money.

If you are gifting savings which would generate enough interest to use the savings starter rate band then it's a very large amount to give away 😳

Exodi

Dazed_and_C0nfused said:

funnynamegoeshere said:

...
Or are there HMRC rules to prevent this ?

No.   But it's no longer your money.

If you are gifting savings which would generate enough interest to use the savings starter rate band then it's a very large amount to give away 😳

"And on behest of the respondent, I would like to inform the presiding judge that the significant cash savings held by the petitioner in her personal account should be considered as non-matrimonial assets of the respondent, and not factored in to any divorce settlement."

"If this is the case, could you explain why the funds have been commingled in this way?"

"It was only ever intended to be for tax evasion purposes, your honour."

jimjames

MX5huggy said:

But you should be making pension contributions to get you back to under £50k especially if you have children and could claim Child Benefit. 

Good point but really depends on the amount above £50k. Much easier to do if £55k compared to £95k.

eskbanker

Exodi said:

Dazed_and_C0nfused said:

funnynamegoeshere said:

...
Or are there HMRC rules to prevent this ?

No.   But it's no longer your money.

If you are gifting savings which would generate enough interest to use the savings starter rate band then it's a very large amount to give away 😳

"And on behest of the respondent, I would like to inform the presiding judge that the significant cash savings held by the petitioner in her personal account should be considered as non-matrimonial assets of the respondent, and not factored in to any divorce settlement."

"If this is the case, could you explain why the funds have been commingled in this way?"

"It was only ever intended to be for tax evasion purposes, your honour."

Appreciate that it was a flippant post but perhaps worth clarifying that a couple choosing to organise savings in a tax-efficient manner like this would be (legal) tax avoidance or planning, rather than (illegal) tax evasion....

https://commonslibrary.parliament.uk/research-briefings/cbp-7948/

Johnjdc

eskbanker said:

Exodi said:

Dazed_and_C0nfused said:

funnynamegoeshere said:

...
Or are there HMRC rules to prevent this ?

No.   But it's no longer your money.

If you are gifting savings which would generate enough interest to use the savings starter rate band then it's a very large amount to give away 😳

"And on behest of the respondent, I would like to inform the presiding judge that the significant cash savings held by the petitioner in her personal account should be considered as non-matrimonial assets of the respondent, and not factored in to any divorce settlement."

"If this is the case, could you explain why the funds have been commingled in this way?"

"It was only ever intended to be for tax evasion purposes, your honour."

Appreciate that it was a flippant post but perhaps worth clarifying that a couple choosing to organise savings in a tax-efficient manner like this would be (legal) tax avoidance or planning, rather than (illegal) tax evasion....

https://commonslibrary.parliament.uk/research-briefings/cbp-7948/

I think precisely the distinction would be that if it was a gift, albeit for tax reasons, it would be legal avoidance. If it was a fake gift, intended to be treated as the donors asset and disguised falsely as the recipient's asset only in order not to pay tax, it would be illegal evasion.

eskbanker

Johnjdc said:

eskbanker said:

Exodi said:

Dazed_and_C0nfused said:

funnynamegoeshere said:

...
Or are there HMRC rules to prevent this ?

No.   But it's no longer your money.

If you are gifting savings which would generate enough interest to use the savings starter rate band then it's a very large amount to give away 😳

"And on behest of the respondent, I would like to inform the presiding judge that the significant cash savings held by the petitioner in her personal account should be considered as non-matrimonial assets of the respondent, and not factored in to any divorce settlement."

"If this is the case, could you explain why the funds have been commingled in this way?"

"It was only ever intended to be for tax evasion purposes, your honour."

Appreciate that it was a flippant post but perhaps worth clarifying that a couple choosing to organise savings in a tax-efficient manner like this would be (legal) tax avoidance or planning, rather than (illegal) tax evasion....

https://commonslibrary.parliament.uk/research-briefings/cbp-7948/

I think precisely the distinction would be that if it was a gift, albeit for tax reasons, it would be legal avoidance. If it was a fake gift, intended to be treated as the donors asset and disguised falsely as the recipient's asset only in order not to pay tax, it would be illegal evasion.

I can't see the latter being perceived as evasion in the context of a married couple, even if it was for less connected people.  Can't say I've researched it in any detail though, so happy to be corrected if there are precedent cases about this....