Tax on savings

Stewert1dn

My partner is now retired early and has no income, if I shift all our savings into an account in her name would she be liable for the tax on the savings.
I understand she can earn up to £1000 tax free, but with no income at all would she still be liable for tax on anything above this? TIA for any help.

Dazed_and_C0nfused

Stewert1dn said:

My partner is now retired early and has no income, if I shift all our savings into an account in her name would she be liable for the tax on the savings.
I understand she can earn up to £1000 tax free, but with no income at all would she still be liable for tax on anything above this? TIA for any help.

Unless you are are talking about huge amounts of capital the £1,000 (which isn't "tax free") won't be of any use to her.

She has to use her Personal Allowance (£11,310 or £12,570) first.

Then the savings starter rate band where up to £5,000 in interest is taxed at 0%.

And only then can she use the savings nil rate band where up to £1,000 interest is also taxed at 0%.

Albermarle

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

Pat38493

Dazed_and_C0nfused said:

Stewert1dn said:

My partner is now retired early and has no income, if I shift all our savings into an account in her name would she be liable for the tax on the savings.
I understand she can earn up to £1000 tax free, but with no income at all would she still be liable for tax on anything above this? TIA for any help.

Unless you are are talking about huge amounts of capital the £1,000 (which isn't "tax free") won't be of any use to her.

She has to use her Personal Allowance (£11,310 or £12,570) first.

Then the savings starter rate band where up to £5,000 in interest is taxed at 0%.

And only then can she use the savings nil rate band where up to £1,000 interest is also taxed at 0%.

Yes - but doesn’t that mean the answer to what the OP fundamentally wants to know is yes - his partner very likely won’t pay any tax on the savings unless it’s very large amounts in 6 figure sums. 

Also not strictly relevant to the question but I would guess that depending on what is meant by “partner” (i.e. are you married or in a civil partnership), there could be IHT implications if you died within 7 years, and also obviously if you put the money in your partner’s name, there is no obligation that they transfer it back to you later if things go south!

stuhse

My uncle has over the years put much of his money into his wifes name apparently to minimise the tax liability between them.  As a couple who have had good careers and never had kids they had amassed quite a sum (most in her name).  She recently had to go into  a care home as he could no longer manage her dementia and power of attorney was put in place.  He now finds he cannot access the very substantial sum of money she has other than to pay for legitmate things for her, ie her care home fees.    Meanwhile he has hardly any savings to call on for things he wants/needs...and most of the money will end up going the way her will splits it...which is not how his will splits things.  Proceed with care and think about unintended consequences.

Stewert1dn

Pat38493 said:

Dazed_and_C0nfused said:

Stewert1dn said:

My partner is now retired early and has no income, if I shift all our savings into an account in her name would she be liable for the tax on the savings.
I understand she can earn up to £1000 tax free, but with no income at all would she still be liable for tax on anything above this? TIA for any help.

Unless you are are talking about huge amounts of capital the £1,000 (which isn't "tax free") won't be of any use to her.

She has to use her Personal Allowance (£11,310 or £12,570) first.

Then the savings starter rate band where up to £5,000 in interest is taxed at 0%.

And only then can she use the savings nil rate band where up to £1,000 interest is also taxed at 0%.

Yes - but doesn’t that mean the answer to what the OP fundamentally wants to know is yes - his partner very likely won’t pay any tax on the savings unless it’s very large amounts in 6 figure sums. 

Also not strictly relevant to the question but I would guess that depending on what is meant by “partner” (i.e. are you married or in a civil partnership), there could be IHT implications if you died within 7 years, and also obviously if you put the money in your partner’s name, there is no obligation that they transfer it back to you later if things go south!

Thank you for your input, we are married for 38 years, and the amount is no where near six figure sums. I appreciate that things may go south (hopefully not) and she could do a runner, but just wanted to maximize our savings and if I can do this by shifting savings into her name so be it (the taxman has more than his fair share). The money is in a joint account at present and the money we are earning in interest will go just over the the maximum we can earn tax free. 

Pat38493

Stewert1dn said:

Pat38493 said:

Dazed_and_C0nfused said:

Stewert1dn said:

My partner is now retired early and has no income, if I shift all our savings into an account in her name would she be liable for the tax on the savings.
I understand she can earn up to £1000 tax free, but with no income at all would she still be liable for tax on anything above this? TIA for any help.

Unless you are are talking about huge amounts of capital the £1,000 (which isn't "tax free") won't be of any use to her.

She has to use her Personal Allowance (£11,310 or £12,570) first.

Then the savings starter rate band where up to £5,000 in interest is taxed at 0%.

And only then can she use the savings nil rate band where up to £1,000 interest is also taxed at 0%.

Yes - but doesn’t that mean the answer to what the OP fundamentally wants to know is yes - his partner very likely won’t pay any tax on the savings unless it’s very large amounts in 6 figure sums. 

Also not strictly relevant to the question but I would guess that depending on what is meant by “partner” (i.e. are you married or in a civil partnership), there could be IHT implications if you died within 7 years, and also obviously if you put the money in your partner’s name, there is no obligation that they transfer it back to you later if things go south!

Thank you for your input, we are married for 38 years, and the amount is no where near six figure sums. I appreciate that things may go south (hopefully not) and she could do a runner, but just wanted to maximize our savings and if I can do this by shifting savings into her name so be it (the taxman has more than his fair share). The money is in a joint account at present and the money we are earning in interest will go just over the the maximum we can earn tax free. 

OK well if you are married, it's not an issue from IHT perspective as you can move money freely between spouses.  For the other part, technically it would all be part of any divorce so again not an issue in theory.

The only other concern would be the one raised about care costs in old age and rules around deliberate deprivation of assets, but it seems like that's not an issue either as you are saying the amounts are not that large anyway.

Albermarle

stuhse said:

My uncle has over the years put much of his money into his wifes name apparently to minimise the tax liability between them.  As a couple who have had good careers and never had kids they had amassed quite a sum (most in her name).  She recently had to go into  a care home as he could no longer manage her dementia and power of attorney was put in place.  He now finds he cannot access the very substantial sum of money she has other than to pay for legitmate things for her, ie her care home fees.    Meanwhile he has hardly any savings to call on for things he wants/needs...and most of the money will end up going the way her will splits it...which is not how his will splits things.  Proceed with care and think about unintended consequences.

It is a good point backed up by a real story. We see often on these forums that some people are too focused on paying less tax, and less on looking at the bigger picture.

westv

It does seem unfair that, on the one hand, the savings of both parties in a couple are combined to get to the £16k savings limit but, on the other hand, if one goes into care the savings are treated separately.

Sg28

Stewert1dn said:

Pat38493 said:

Dazed_and_C0nfused said:

Stewert1dn said:

My partner is now retired early and has no income, if I shift all our savings into an account in her name would she be liable for the tax on the savings.
I understand she can earn up to £1000 tax free, but with no income at all would she still be liable for tax on anything above this? TIA for any help.

Unless you are are talking about huge amounts of capital the £1,000 (which isn't "tax free") won't be of any use to her.

She has to use her Personal Allowance (£11,310 or £12,570) first.

Then the savings starter rate band where up to £5,000 in interest is taxed at 0%.

And only then can she use the savings nil rate band where up to £1,000 interest is also taxed at 0%.

Yes - but doesn’t that mean the answer to what the OP fundamentally wants to know is yes - his partner very likely won’t pay any tax on the savings unless it’s very large amounts in 6 figure sums. 

Also not strictly relevant to the question but I would guess that depending on what is meant by “partner” (i.e. are you married or in a civil partnership), there could be IHT implications if you died within 7 years, and also obviously if you put the money in your partner’s name, there is no obligation that they transfer it back to you later if things go south!

Thank you for your input, we are married for 38 years, and the amount is no where near six figure sums. I appreciate that things may go south (hopefully not) and she could do a runner, but just wanted to maximize our savings and if I can do this by shifting savings into her name so be it (the taxman has more than his fair share). The money is in a joint account at present and the money we are earning in interest will go just over the the maximum we can earn tax free. 

If the money is currently in a joint account then the tax liability is split equally between you. So if you earned £2000 in tax in a year £1000 is hers and £1000 is yours meaning you'll be within tax free amount.