jonc

Am I right in thinking I can use my spouse's tax allowance to reduce our tax bill.

Scenario:

I am a higher band tax payer. My wife doesn't work and therefore doesn't pay tax. If I setup a savings account in her name and transfer say £2000 per month from my already taxed income from my bank account, would my wife be liable for any tax on the interest earned. Would my £2000 contribution to her savings account be classed as income for my wife?

Cheers for any advice.

Devildog

Yes

Yes, she would, but only on interest earned in excess of her personal allowance. She could, in fact, recover any tax deducted at source by the institution managing her savings account up to the limit of her personal allowace.

No. It would be a gift. What you do with your taxed income is entirely at your discretion.

HTH

paulg1979

iTrader: (1)

If you are pretty close to your boss you could have a word and they could always put her on their payroll and pay your wife half your wages and say she works for your employer but from home.

Steve vRS

If you have a joint savings account with a low rate tax payer and you are a high rate tax payer, which rate do you pay on the interest?

Steve

Tiggs

half and half - then slap yourself for not putting it all in her name.

as for employers putting spouses on the payrole....the request was for financial gurus - not del boy trotter.

Devildog

HMRC assumes its split 50:50, so you pay half at low rate and half at high rate.

scooby_mark

you have to pay tax on everything

Devildog

Right up until the point she divorces you



(although I'd have thought that "financial gurus" could spell "payroll")

Steve vRS

Thanks. it was an academic question anyway as our only savings are ISAs as I believe the better option is to overpay the mortgage. Do you concur?

Steve

Devildog

I'm not an IFA, but yes, I would concur

Tiggs

your mortgage will almost certainly have a higher % rate than your savings (hence bank makes profit).....only time you are better to hold money and keep debt is when the money is making more than the debt - and that wont happen without risk.

devildog......i think you'll find financial experts that cant spell have better earning potential than English teachers that cant add up - so i'm happy with my god given skill set

jonc

Thanks for all the replies, it pretty much answers all my question!

The savings account is actually a current account, both Halifax and Coventry BS offer 6.1%AER interest on these accounts and I will be using this account to pay bills and do direct debits etc and will top up this account every month. I'm already overpaying on my mortgage (4.69% fixed) so that is covered to some extent.

I've now realised I've been overpaying tax on our joint account!!

If you want answers on anything come to Scoobynet!!