Using my wife's Personal Savings Allowance

gwapenut · 17 March 2019 at 11:44AM

My understanding is that, because there is no IHT between husband and wife, I am able to gift some of my savings to my wife to make use of her 0% tax band for up to £1000 of savings interest (and premium bonds). She can later, if she chooses, gift some or all of those savings back to me?

Is this common practice and legal?

Dazed_and_confused · 17 March 2019 at 11:49AM

You cannot make use of either of her 0% savings rate bands (upto £5,000 savings starter rate or upto £1,000 savings nil rate).

If you gift her the money it is her money.

She could gift it back to you later. Or she could gift to her favourite charity. It's her to do with as she wants.

Sure someone more knowledgeable will comment on the legality in due course.

xylophone · 17 March 2019 at 1:38PM

You may give your wife whatever you wish.

https://www.gov.uk/inheritance-tax/gifts

This will be an outright gift and she can do whatever she wishes with it.

It makes sense for spouses to divide their assets in such a way as to make maximum use of any allowances available, especially if one spouse is a non taxpayer or pays tax at a lower rate than the other.

https://www.express.co.uk/finance/personalfinance/751643/Save-tax-10-reduce-pay-HMRC

polymaff · 17 March 2019 at 7:55PM

https://www.bloomsburytaxonline.com/making-gift-avoid-settlements-trap/

"a right to income" Hmmm ...

gwapenut · 17 March 2019 at 8:06PM

Thanks for the replies so far, interesting about the settlements trap.

Maybe a less dodgy way than gifting, especially if the gift were returned at a later date, is to open a joint savings account and we both put money in there (more from me), and then the interest is divided equally between us and our tax returns?

polymaff · 17 March 2019 at 8:55PM

gwapenut wrote: »

Thanks for the replies so far, interesting about the settlements trap.

Maybe a less dodgy way than gifting, especially if the gift were returned at a later date, is to open a joint savings account and we both put money in there (more from me), and then the interest is divided equally between us and our tax returns?

Yes. They can't easily bust a 50/50 arrangement - yet.

HMRC are keener and keener on trying to trap those doing anything which is solely for the purpose of reducing their tax take. In particular they make more and more effort to confuse tax avoidance and tax evasion. The baskets !

xylophone · 17 March 2019 at 9:07PM

I really do not see how a husband giving his wife some money can be accounted a settlement caught by the rules discussed above.

It makes absolutely no sense for a husband to be paying tax on savings interest when he can give his wife some cash, reduce his own liability to tax and enable her to benefit.

As for premium bonds, you cannot gift another person your premium bonds and any prize income is tax free.

Using my wife's Personal Savings Allowance

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