Advice - Saving in my wife's name
Discussion
Recently my wife has quit work to look after our baby son, I expect it will be at least 5 years or more before she goes back to work. What I wanted to know is what are the rules in using her status to avoid paying tax on savings.
Currently I have both a cash and shares ISA which is close to maximum, can I use a savings account in her name and pay directly into it, or would she have to contribute from her housekeeping?
Advice welcome as I would like to make use of any allowance that can be shared between us.
Regards, JD
Currently I have both a cash and shares ISA which is close to maximum, can I use a savings account in her name and pay directly into it, or would she have to contribute from her housekeeping?
Advice welcome as I would like to make use of any allowance that can be shared between us.
Regards, JD
Edited by jdwoodbury on Sunday 26th December 06:45
birdcage said:
Eric Mc said:
One of the advantages of being officially married is that there are no tax implications of moving funds from one spouse to the other.
I think that's the only one actually 
(PS - I know you're joking - but people sometimes do not truly appreciate the tax and succession risks they are sometimes taking by NOT marrying).
Edited by Eric Mc on Sunday 26th December 08:39
Eric Mc said:
(PS - I know you're joking - but people sometimes do not truly appreciate the tax and succession risks they are sometimes taking by NOT marrying).
Could you do a quick overview or provide any helpful links? I have looked in the past but quickly glazed over and went and washed the car instead. My situation is I'm not married and no real inclination to be so in the near future, partner and I have been together 5 years and living together. No children and none to come.
Main asset (house) and only liability (mortgage) in joint names, all other assets mainly in my name (cars, savings etc).
Edited by Merlot on Sunday 26th December 23:00
jdwoodbury said:
....can I use a savings account in her name ...
Just be careful of the wording - not that you're ever likely to be queried on it.To allow savings to be be free of further tax it has to be her money that is earning the interest - not your money in her name. You also can't randomly split interest between you - the critical thing is who owns the money that in generating the interest.
This means that you do have to give her the money. It's something that I make extensive use of, but it's not for everyone.
Deva Link said:
jdwoodbury said:
....can I use a savings account in her name ...
Just be careful of the wording - not that you're ever likely to be queried on it.To allow savings to be be free of further tax it has to be her money that is earning the interest - not your money in her name. You also can't randomly split interest between you - the critical thing is who owns the money that in generating the interest.
This means that you do have to give her the money. It's something that I make extensive use of, but it's not for everyone.
Merlot said:
Eric Mc said:
(PS - I know you're joking - but people sometimes do not truly appreciate the tax and succession risks they are sometimes taking by NOT marrying).
Could you do a quick overview or provide any helpful links? I have looked in the past but quickly glazed over and went and washed the car instead. My situation is I'm not married and no real inclination to be so in the near future, partner and I have been together 5 years and living together. No children and none to come.
Main asset (house) and only liability (mortgage) in joint names, all other assets mainly in my name (cars, savings etc).
Edited by Merlot on Sunday 26th December 23:00
The main tax problem area is Inheritance Tax. Married couples can transfer assets between each other with no IHT issues whatsoever. Even more importantly, if one spouse dies, there will be no IHT if the other spouse inherits the deceased's estate (which is the normal suituation).
With co-habiting couples, the law seees them as total strangers so transfers on death become completely exposed to IHT - unless complex (and expensive) IHT planning measures are taken in advance.
From a legal point of view, there can be succession problems when the couple aren't married - especially if the deceased died intestate (without a will). In law, there are provisions to ensure remaining spouses are not left with nothing. With cohabiting couples, these automatic rights do not exist and a surviving partner could find themselves having to fight with other relatives of the deceased, particularly children from previous relationships) for a piece of the deceased's estate.
There can also be serious issues witth regard to access to joint bank accounts - although even married couples can have these problems.
People in civil partnerships now have the same legal and tax status as married couples.
jdwoodbury said:
Deva Link said:
jdwoodbury said:
....can I use a savings account in her name ...
Just be careful of the wording - not that you're ever likely to be queried on it.To allow savings to be be free of further tax it has to be her money that is earning the interest - not your money in her name. You also can't randomly split interest between you - the critical thing is who owns the money that in generating the interest.
This means that you do have to give her the money. It's something that I make extensive use of, but it's not for everyone.
There's no need for that - as Eric Mc mentioned earlier, you can just gift money to her. The point I was trying to make is that the money legally becomes hers and that might not always be ideal.
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