Urgent tax question guys

Stavros_3

My wife is a 40% tax payer, I am, retired and a 22% tax payer. We have seperate savings accounts with quite a lot of dosh in. How much can legally transfer to me each tax year with a view to us avoiding paying the higher tax threshold on her savings, thanks guys

dzug

Stavros wrote: »

My wife is a 40% tax payer, I am, retired and a 22% tax payer. We have seperate savings accounts with quite a lot of dosh in. How much can legally transfer to me each tax year with a view to us avoiding paying the higher tax threshold on her savings, thanks guys

As much as you want. Or at least as much as she will trust you with....

LittleVoice

But obviously not enough for the interest to take you into the 40% band as you (combined with your wife) would be worse off, I believe.

MoneyMagician

LittleVoice wrote: »

But obviously not enough for the interest to take you into the 40% band as you (combined with your wife) would be worse off, I believe.

For income tax purposes, you can transfer as little or as much as you would like to, tax on the interest earned will be assessed by the individual who earns it.

For this tax year 2007/08, the higher rate tax (40%) threshold is £34,600. Taking the simple assumption that your wife earns a salary which added to her savings income exceeds this level, it means that your wife should transfer you an amount which will reduce her earnings to £34,600 and up yours, which will mean a saving her high rate tax, offset by your paying of basic rate tax.

If your wife is not yet of a pensionable age and is still a higher rate tax payer after this transfer, you may wish to consider contributing to a pension scheme which will allow her to reclaim further higher rate tax suffered.

LittleVoice

Does your wife have dividend income from shares? If so, transfer those shares to you. The tax differential is higher.

Stavros_3

Nope, she doesn't, yes we trust each other 100%, we are just trying to avoid paying uncessary tax on savings, we are maxed out on tax free savings. I am just asking if she can transfer some of her savings into my account and how much?

Mikeyorks

You asked exactly the same question only a week ago. Weren't the answers good enough!!

http://forums.moneysavingexpert.com/showthread.html?p=8161499#post8161499

Stavros_3

Yes but they were some mixed messages and I am still confused. I sincerely apologise for repeating my question

Murdina

I don't think reading all the posts the messages are mixed at all. Yes she can give you all her money if she wants to - that's up to her. If you want to work out the optimum amount for each of you to have to minimise tax, then that's fine - do it. The other comments are suggestions on how you might refine things e.g if you have joint savings accounts (because these have special rules) or ways she could keep her money but maybe reduce her tax.

One further thought though - have you made wills and done any IHT planning? This may be affected if you are going to switch savings around significantly.

You might benefit from seeing an IFA and talking through all the options with savings and also possibly pensions as mentioned elsewhere.