Different tax bands - juggling our money

Dragonman

Hello

My wife and I both recently opened (separately) a number of 12 month fixed rate savings accounts.

At the time we were both basic rate tax payers, but I've just got a new job which will push me into the top rate. What I would like to do is "transfer" ownership of the money in my accounts to my wife, without (assuming this is even possible) actually closing them. I am thinking in terms of making some kind of declaration of trust in favour of my wife - does anyone know if this is possible/straightforward? If it is, I am also wondering if this will affect our protection under the savings compensation scheme. Currently each of us has less than £35K with a single institution, but if the two accounts with each institution are added together and both count as hers for compensation scheme purposes, then we/she will be over the threshold.

I suspect the phrase "trying to have one's cake and eat it" will come to mind - so maybe there's no easy answer, but any thoughts would be gratefully appreciated!

Primrose

This is an interesting question and perhaps somebody more qualified can answer this because if you simply write a dated letter to your wife confirming that you have "gifted her" your 50% share of your bond holdings, I don't know whether that is sufficient for the Revenue to accept it and tax your wife accordinglyaccordingly. What's to stop you hedging your bets in that you write the "Gift" letter to you and keep it safe, but if the institution goes belly up, you don't produce the letter and for all intents and purposes, you still both hold 50% each and are thus fully protected by the compensation scheme?. I'm sure there must be a flaw in this theory and no doubt somebody here will find it.

debbie42

You can gift money between spouses without any restrictions, so that your wife can take advantage of better net rates on savings. I'd have thought though that for tax purposes it was either in her name or yours.

earlgrey_3

Sorry, don't know the answer but would be a lovely idea. Wish we were back in the days of the "married couple's allowance" when there was far less need to juggle investment income about. I find fixed term savings where I can't arrange to get the interest when and where I want it a headache for similar reasons. You might get a more authoritative reply on http://www.taxationweb.co.uk/forum/. Good luck.