how can I work this tax out

Peter-Pan_5

My wife has no income so our savings are in her name tax free,she gets the

maximum allowance,what happens when she starts working does she tell the

IR or will her employer sort it out ,confused.very.or is it worth working part-time

sarahlouise210

The employer will have no knowledge of your savings! (would you want them to have??)
If your wife starts to be liable for tax she will need to conact her banks and building societies and ask to de-register. If she is already using her full personal allowance on your savings it will not make much difference if she works full or part time.

telly-addict

When she starts working for an employer she needs to present either a form P45 from her previous employment or to complete a form P46 which the employer will give her. This will enable her to be allocated a PAYE code to facilitate the collection of tax from her employment income.

Presumably the code will be the full personal allowance and, as previously stated, as her income will then be in excess of the personal allowance she cannot have her interest paid gross (without tax deducted).

Not sure what you mean by 'she gets the maximum allowance'. Everyone receives the personal allowance currently of £4895. People older than 65 can receive more. If her income is less than this, then it makes sense to receive interest gross. If it is more than this, she should be paying tax at source and should de-register.

Peter-Pan_5

Thank you for both your help,now it is very clear in our minds,telly-

addict "max allowance" I should have said personal allowance,she is under 60.

Rafter

Peter,

If you pay tax at the higher rate (40%) it is still worth keeping the savings in her name since you would have to declare them on your tax return and pay additional tax.

You should also make sure you are making the best use of your ISA allowances to keep as much as possible tax free.

If you have a mortgage and significant savings, it may be worth investigating an offset mortgage, although you need a lot of savings to make this more efficient than a best buy discount mortgage.

Good luck

R.

Peter-Pan_5

Thanks rafter we have no mortgage and no isa`s but over 100k in savings

Murtle

No ISA's, not sure of your circumstance, but I would think that's a good place to put some??! Especially if it's in a savings account and not being used??!

Sorry didn't mean to interrupt!