Using family members ISA allowances.

donaldtramp

Is there any problem in using other family members ISA allowance for the year, if you have already used your own allowance, from a tax man point of view??

I understand the risks of being able to trust family members with your cash etc etc

How would the taxman take to money being transferred to other family members and them opening up ISAs in their names?

Surely there is no issue with transferring money from my account to whoever I want ,a partner etc.
What they do with it after that would be up to them.

Any problems with this?

Cheers
DT

Aegis

donaldtramp wrote: »

Is there any problem in using other family members ISA allowance for the year, if you have already used your own allowance, from a tax man point of view??

I understand the risks of being able to trust family members with your cash etc etc

How would the taxman take to money being transferred to other family members and them opening up ISAs in their names?

Surely there is no issue with transferring money from my account to whoever I want.
What they do with it after that would be up to them.

Any problems with this?

Cheers
DT

It's called tax evasion if you try to avoid paying tax by using family allowances that you're not entitled to.

Your ISA allowance is for your money. Your family member's ISA allowance is for theirs. You can gift them the money for them to do what they want with, but it legally becomes theirs as soon as you do, and becomes subject to possible inheritance tax if you die within 7 years of making the gift.

They have no obligation to pay you back, and if they do they set up another possible inheritance tax issue in the other direction.

The IHT issues don't exist if the person in question is your spouse, but the money still legally becomes hers to invest as she wishes.

Baldur

Just to add to Aegis's points, the ISA application form has to include a declaration
that all subscriptions made, and to be made, belong to them.

There is also a rule which prrohibits an ISA from being used as security for a loan.

donaldtramp

It's called tax evasion. Your ISA allowance is for your money. Your family member's ISA allowance is for theirs. You can gift them the money for them to do what they want with, but it legally becomes theirs as soon as you do, and becomes subject to possible inheritance tax if you die within 7 years of making the gift.

Thanks for the response.

Tax Evasion!! Don't like the sound of that! I would much rather do tax limitation!
I understand the fact that the cash would legally become theirs.

I knew there were issues with partners. But surely if you share mortgages, CGT responsibilities etc etc. There would be no problem fully utilising ISA allowances It would after all be their money.

Aegis

donaldtramp wrote: »

Thanks for the response.

Tax Evasion!! Don't like the sound of that! I would much rather do tax limitation!
I understand the fact that the cash would legally become theirs.

I knew there were issues with partners. But surely if you share mortgages, CGT responsibilities etc etc. There would be no problem fully utilising ISA allowances It would after all be their money.

If it's their money and you're happy to accept their decisions as to what they want to do with it, along with any IHT liability that arises from making cash gifts to various family members, there's not a lot wrong with the idea. However, you most certainly have to see it as them using their money in their ISA allowance, not your money

typeractive

hmm - interesting.

I was trying to convince my parents to each open ISA's for their own finances. My parents have a different outlook on saving and are much less trusting in the offerings of savigns accounts today.

It did occur to me of a similar situation to that of your original post Donald, though I also don't really like the idea of any taxes having to be repaid in the future - my parents don't deserve the hassle. :S

Fire_Fox

There is a difference between

1. taking money out of a joint current account and putting it into one person's cash ISA (after all you can't have a joint ISA afaik?) and
2. transferring money from one individual's account to another, taking advantage of tax free interest and transferring the total back.