Can I save in my wife's account?

Doubleshotdamo
Doubleshotdamo Posts: 58
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edited 28 September 2023 at 6:34PM in Savings & investments
As interest rates have increased, I will be paying tax on savings interest. Isa is sorted, and fixed rate savings ending / ended. Can I open an account for my wife and save my money in it so as not to lose as much in tax? My wife works part time and is well below the tax threshold. 
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  • Yes you can. Just be aware, all the money in accounts in her name is legally her's.
  • As interest rates have increased, I will be paying tax on savings interest. Isa is sorted, and fixed rate savings ending / ended. Can I open an account for my wife and save my money in it so as not to lose as much in tax? My wife works part time and is well below the tax threshold. 
    Of course you can. She can then choose to spend it however she likes as an account in her name renders it legally hers and she doesn't have to give it back ;-)
  • SVaz
    SVaz Posts: 219
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    Presumably you have a joint account?
    She would open her own savings,  you would fund it via the joint account. 
    The majority of our savings are in my Wife’s name because she’s not a tax payer.  
  • SVaz said:
    Presumably you have a joint account?
    She would open her own savings,  you would fund it via the joint account. 
    The majority of our savings are in my Wife’s name because she’s not a tax payer.  
    Yes, we have a joint account, which is basically a bills account where my salary gets paid and which I use as s personal account. She has her own current account, but does not save. 
  • Can I just clarify, all the time my wife doesn't earn enough to pay tax, she'd pay no tax on any savings interest regardless of how much interest she gets, up until her salary and interest exceeds the tax threshold? 
  • molerat
    molerat Posts: 31,504
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    edited 28 September 2023 at 7:09PM
    She could earn interest of up to £18570 without paying tax.  Any income eats into the first £17570 of that with the additional £1000 tax free in any case.  If she has given her 10% tax allowance to you that amount is reduced to £17210 with any income reducing the first £16210.
  • molerat said:
    She could earn interest of up to £18570 without paying tax.  Any income eats into the first £17570 of that with the additional £1000 tax free in any case.  If she has given her 10% tax allowance to you that amount is reduced to £17210 with any income reducing the first £16210.
    Thought it was £12570?
  • molerat said:
    She could earn interest of up to £18570 without paying tax.  Any income eats into the first £17570 of that with the additional £1000 tax free in any case.  If she has given her 10% tax allowance to you that amount is reduced to £17210 with any income reducing the first £16210.
    Thought it was £12570?
    There is also the £5K savings starter rate for low earners in addition to the personal allowance and the £1K PSA. More info in the MSE link below:

    https://www.moneysavingexpert.com/savings/tax-free-savings/
    'Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn’t, pays it' - Albert Einstein.
  • xylophone
    xylophone Posts: 43,809
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    Thought it was £12570?

    Your wife earns under £12,570.

    Let's say by way of example that she earns £10,000 a year.

    She can earn £2,570  in savings interest tax free.

    Then she qualifies for the "starter rate for savings" - so can earn a further £5000 in interest tax free.

    Then she qualifies for the Personal Savings Allowance - so can earn a further £1000 in interest tax free.

    If she had no other income at all she could earn up to £18,570 in tax free interest.

    https://www.moneyhelper.org.uk/en/savings/types-of-savings/tax-on-savings-and-investments

  • And if you aren't a higher rate payer she might want to consider applying for Marriage Allowance.

    This will give her a reduced Personal Allowance of £11,310 and you would get £252 knocked off your tax liability.

    If her non savings non dividend income is less than £11,310 this won't change the fact that she would have full £5,000 and £1,000 tax bands where interest is taxed at 0%.
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