Tax on savings..?

ipri

Hi ...going to transfer all savings to wifes name...the interest will be her sole income...confused about the tax situation....in April is it 20% on the interest gained?? Does the bank take this before giving the interest? thanks

rosy

If the interest on all your savings is going to be less than the personal allowance, your wife needs to register with the bank to receive interest gross. She'll then get the gross interest paid into her bank account ( they don't take the 20% tax off it if you are registered to receive interest gross so you won't need to claim it back ).

ipri

Thanks Rosy.....the interest will be more than the personal allowance....how can we calculate how much we pay...do we deduct £5225 ( P. allow.) 1st then deduct 20% from the remainder?

dunstonh

If the interest is more than £20,900 then there will also be a further liability. (Im assuming over 65 as this is the retirement section).

rosy

Yes, that's how I would calculate it. I think your wife will probably have to be classified as not eligible to receive interest gross; the bank then takes 20% of the lot and then you reclaim the 20% you have paid on the first £5225 from the taxman at the end of the financial year... someone correct me if I'm wrong!

ManAtHome

You still get the 10% band for savings interest (1st £2,000 over your allowance).

DeepSporran

ManAtHome wrote: »

You still get the 10% band for savings interest (1st £2,000 over your allowance).

isn't the 10% band being scrapped in April ?

dunstonh

It is for income but not for savings. A wonderfully confusing amendment by the Govt.

CLAPTON

whether it worth it depends upon

how much money there is
is any in ISAs already
your wife's age (i.e. 65 and over or 75 and over)
her other income (state pension etc)
your income
your age