Can I save in my wife's account?

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  • masonic
    masonic Posts: 23,205 Forumite
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    edited 1 October 2023 at 12:29PM
    Another issue here is the requirements of banks to know their customer. If you are operating an account in the sole name of another individual then that is effectively evading KYC and could result in the account being frozen if the bank becomes suspicious someone other than the named account holder is using the account.
  • Altior
    Altior Posts: 637 Forumite
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    Thread is a reminder of one of the many excellent scenes from (quite possibly the greatest movie ever produced) Shawshank :)  

    Shawshank Redemption - Best Movie Scene | Do you Trust Your Wife? Rooftop Scene - Movies Clip - YouTube
  • BooJewels
    BooJewels Posts: 2,836 Forumite
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    What's the tax situation with joint savings accounts?  Does HMRC assume that half of the interest belongs to each party?   A lot of savings accounts can't be opened in joint names, but there certainly are some.  That would potentially halve the tax burden to the OP and protect his funds in case of future developments. 
  • masonic
    masonic Posts: 23,205 Forumite
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    edited 1 October 2023 at 12:47PM
    BooJewels said:
    What's the tax situation with joint savings accounts?  Does HMRC assume that half of the interest belongs to each party?   A lot of savings accounts can't be opened in joint names, but there certainly are some.  That would potentially halve the tax burden to the OP and protect his funds in case of future developments. 

    Default assumption is a 50:50 split. I believe HMRC can be contacted and provided with a justification for a different split if one party can demonstrate ownership of the majority of funds. I'm not sure what would convince them that the lower earner should be treated as owning more than 50% - probably something like the sale of assets owned individually.
  • gele
    gele Posts: 274 Forumite
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    I was going to start another thread but wasn't sure where best to post it and decided it sat ok here as it is linked to recent posts.
    If someone earns say £18k pa and is considering reducing their hours, if they were to reduce to the point they were earning £12k and they had savings, they could effectively, with enough savings, gain back almost all the income lost from work with the £5k allowance but still have the benefit of working less,  Is that right?
  • masonic
    masonic Posts: 23,205 Forumite
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    edited 1 October 2023 at 12:54PM
    gele said:
    I was going to start another thread but wasn't sure where best to post it and decided it sat ok here as it is linked to recent posts.
    If someone earns say £18k pa and is considering reducing their hours, if they were to reduce to the point they were earning £12k and they had savings, they could effectively, with enough savings, gain back almost all the income lost from work with the £5k allowance but still have the benefit of working less,  Is that right?

    That's more a question of what income you could generate from your savings, but you are right that the starter rate for savings would come into play. You'd probably be worse off than if you continued working your original hours and paid tax on the savings above your PSA though.
    If you are just targeting £18k income, then yes with enough savings you could get there with little to no tax, but you might want to consider other income producing assets.
  • BooJewels
    BooJewels Posts: 2,836 Forumite
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    gele said:
    I was going to start another thread but wasn't sure where best to post it and decided it sat ok here as it is linked to recent posts.
    If someone earns say £18k pa and is considering reducing their hours, if they were to reduce to the point they were earning £12k and they had savings, they could effectively, with enough savings, gain back almost all the income lost from work with the £5k allowance but still have the benefit of working less,  Is that right?
    That's correct.  You could of course earn more than that, but you might have to pay tax on the excess. There's no ceiling on how much interest you can earn.

    But you'd need somewhere in the region of £120k in savings @ 5% to earn £6k in interest. And then you'd be at the mercy of future interest rates and the fact that they're likely to fall from current rates. Plus, if you require interest being paid monthly as income, you get a slightly lower return by eliminating the opportunity to compound the interest.
  • gele
    gele Posts: 274 Forumite
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    Thanks. This is useful to know as I am considering reducing hours prior to retirement anyway.
  • BooJewels
    BooJewels Posts: 2,836 Forumite
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    gele said:
    Thanks. This is useful to know as I am considering reducing hours prior to retirement anyway.
    Make sure you do lots of careful calculations - depending on how close you are to retirement, if you'll get full SP etc.  And with current inflation rates, the standard of living you enjoy now for £18k will cost you in excess of £19k next year.  So you need to project forwards a few years with inflation and probably reducing interest rates, to see if it will still work for you in a year or two.
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