Married Couple - Savings in Non Tax Payers a/c ?


D

Daniel

Is the following legal ?

If a married couple puts all their savings into the account of the person
who isn't a tax payer, rather than having it in the tax payers account ?

Eg. If one partner worked and the other didn't, would this be allowed ?

Any advice appreciated,

Thanks
Daniel
 
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E

Eric Jones

Daniel said:
Is the following legal ?

If a married couple puts all their savings into the account of the person
who isn't a tax payer, rather than having it in the tax payers account ?

Eg. If one partner worked and the other didn't, would this be allowed ?

Any advice appreciated,

Thanks
Daniel
Yes it is perfectly legal to do this. BUT it must be a genuine transaction
ie non tax payer must have sole access to the account and could withdraw all
the money and bugger off and there is nothing that tax payer could do about
it.
 
R

Ronald Raygun

Daniel said:
Is the following legal ?

If a married couple puts all their savings into the account of the person
who isn't a tax payer, rather than having it in the tax payers account ?

Eg. If one partner worked and the other didn't, would this be allowed ?
Yes.

Well, that's the short answer. The long one can wait.
Until the divorce.
 
D

Daniel

Eric Jones said:
Yes it is perfectly legal to do this. BUT it must be a genuine transaction
ie non tax payer must have sole access to the account and could withdraw all
the money and bugger off and there is nothing that tax payer could do about
it.
So, in terms of Inland Revenue and Legal purposes, this would be OK ??

Thanks
 
R

Ronald Raygun

Eric said:
Yes it is perfectly legal to do this. BUT it must be a genuine transaction
ie non tax payer must have sole access to the account and could withdraw
all the money and bugger off and there is nothing that tax payer could do
about it.
No. Don't forget there is a distinction between full ownership and
beneficial ownership. Basically all that would need to happen is that
the non-tax-payer acquires full control over the *interest*, but could
then immediately gift it to the "pot".
 
N

Nebulous

Daniel said:
Is the following legal ?

If a married couple puts all their savings into the account of the person
who isn't a tax payer, rather than having it in the tax payers account ?

Eg. If one partner worked and the other didn't, would this be allowed ?

Any advice appreciated,

Thanks
Daniel
Yes it certainly is allowed, but then it isn't their money- it belongs to
whoevers name it is in. This person can then do what they want with it
without permission from the other one, including ending the relationship and
keeping it all.

James
 
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G

GSV Three Minds in a Can

from the wonderful person said:
Is the following legal ?

If a married couple puts all their savings into the account of the person
who isn't a tax payer, rather than having it in the tax payers account ?

Eg. If one partner worked and the other didn't, would this be allowed ?
Yes, it's pretty normal practise. However you do have to at least
pretend that the money belongs to the non-taxpayer (i.e. has been given
to them).
Note that it's usually a good idea for both of them to use their
cash-mini-ISA allowances up first, since the rate son those are usually
higher.
 
R

Ronald Raygun

Nebulous said:
Yes it certainly is allowed, but then it isn't their money- it belongs to
whoevers name it is in. This person can then do what they want with it
without permission from the other one, including ending the relationship
and keeping it all.
Not correct. You can gift beneficial interest without gifting
controlling interest. The same is true of assets other than money,
such as BTL houses, where you can retain paper ownership but gift
the rental income to the spouse.
 
R

Ronald Raygun

Daniel said:
So, in terms of Inland Revenue and Legal purposes, this would be OK ??
What exactly do you mean by "legal purposes"?
 
D

Daniel

Ronald Raygun said:
What exactly do you mean by "legal purposes"?
I mean is it completely legal for Inland Revenue purposes ??

Thanks
Daniel
 
D

Daniel

Ronald Raygun said:
No. Don't forget there is a distinction between full ownership and
beneficial ownership. Basically all that would need to happen is that
the non-tax-payer acquires full control over the *interest*, but could
then immediately gift it to the "pot".
Sorry, I'm a bit confused by your answer ?? - What do you mean by 'Gift it
to the pot' ?

Thanks
 
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A

Alex Heney

Not correct. You can gift beneficial interest without gifting
controlling interest. The same is true of assets other than money,
such as BTL houses, where you can retain paper ownership but gift
the rental income to the spouse.
But if you do that, then you will still be liable for the tax on it
under the settlements legislation (Sections 660A-G ICTA 1988 as
amended by Finance Act 1995)
<http://www.hmso.gov.uk/acts/acts1995/Ukpga_19950004_en_24.htm>

Outright gifts between spouses are exempt from this, but not gifts
which are basically gifts of income.

The IR are even trying it on at the ,moment with Husband and Wife
businesses, where only one brings money in, but both have shares in
the business. There is a court case with judgment expected in a few
weeks that hopefully will clarify whether their interpretation of this
law is valid.
 
U

usenet

In uk.finance Nebulous said:
Yes it certainly is allowed, but then it isn't their money- it belongs to
whoevers name it is in. This person can then do what they want with it
without permission from the other one, including ending the relationship and
keeping it all.
Does this mean you'd have to have separate bank accounts for such
amounts? What if the amount is made out to 'Jane Doe' explicitly but
put into a savings account belonging to 'Jane and John Doe'?
 
R

Ronald Raygun

Daniel said:
Sorry, I'm a bit confused by your answer ?? - What do you mean by 'Gift it
to the pot' ?
Notionally gift half of it to the other spouse.

I'm thinking of "the pot" as what's sometimes called communal property,
i.e. really both of them own the whole money together, which can be thought
of as owning half each. But if they have half the beneficial ownership
each, then half the interest earned would be taxed as hers and half as his.

If (stereotyping) we assume he is the higher rate taxpayer, he can gift
beneficial ownership of his half of the pot to her, remembering that
real ownership remains nevertheless in the pot. Then all the interest
earned will be taxed as hers, and of course then *is* hers. She would
then need to gift all this earned interest back to the pot if their
intention is that the total sum (capital plus interest) should remain
in 50-50 real ownership. That done, the beneficial ownership of that
half would need to go back to her in order that the compounded interest
to be earned next year be taxed exclusively as hers.

It should work equally well without a pot, i.e. even if all the money
is his, he could (while retaining real ownership) gift beneficial
ownership of all of it to her, so that the interest would be earned
(and taxed) as hers. She could then keep the interest, or gift it all
to him.
 
R

Ronald Raygun

Alex said:
But if you do that, then you will still be liable for the tax on it
under the settlements legislation (Sections 660A-G ICTA 1988 as
amended by Finance Act 1995)
<http://www.hmso.gov.uk/acts/acts1995/Ukpga_19950004_en_24.htm>

Outright gifts between spouses are exempt from this, but not gifts
which are basically gifts of income.
I see, so gifts of beneficial ownership while retaining controlling
ownership would be "basically gifts of income", and so be caught.
The answer, then, is that to qualify for exemption the gift has to
be total, in the sense that if the other spouse chose to run off
with it, there could be nothing the donor could do about it.

So long as they stay all lovey-dovey and trusting, they'll be OK.
The IR are even trying it on at the ,moment with Husband and Wife
businesses, where only one brings money in, but both have shares in
the business. There is a court case with judgment expected in a few
weeks that hopefully will clarify whether their interpretation of this
law is valid.
What's the nature of the lack of clarity?
 
D

Doug Ramage

Ronald Raygun said:
I see, so gifts of beneficial ownership while retaining controlling
ownership would be "basically gifts of income", and so be caught.
The answer, then, is that to qualify for exemption the gift has to
be total, in the sense that if the other spouse chose to run off
with it, there could be nothing the donor could do about it.

So long as they stay all lovey-dovey and trusting, they'll be OK.


What's the nature of the lack of clarity?
The taxing of the *dividend* income on the spouse who earns the profits of
the company, notwithstanding that the other spouse has received the
dividend; and irrespective of the lack of any dividend manipulation by
waivers or different classes of shares.
 
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R

Ronald Raygun

Doug said:
The taxing of the *dividend* income on the spouse who earns the profits of
the company, notwithstanding that the other spouse has received the
dividend; and irrespective of the lack of any dividend manipulation by
waivers or different classes of shares.
OK, that's the issue. What is unclear about it?
 
D

Doug Ramage

Ronald Raygun said:
OK, that's the issue. What is unclear about it?
I for one think the IR are wrong. :)

IMHO, the legislation is "clear" that no such tax "attribution" is correct.
Another attempt at goal-post moving by the IR.
 
J

Joe

Eric Jones said:
transaction
ie non tax payer must have sole access to the account and could withdraw all
the money and bugger off and there is nothing that tax payer could do about
it.
But in the event that the relationship did end, could these gifts be offset
against any claim on the husband's pension fund?

I mean, could it be argued that the money was given to the wife in order to
give her financial independence - ie in effect it represented her pension
fund?

Joe
 
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J

John-Smith

Joe said:
But in the event that the relationship did end, could these gifts be offset
against any claim on the husband's pension fund?

I mean, could it be argued that the money was given to the wife in order to
give her financial independence - ie in effect it represented her pension
fund?
Well that depends on how cynical you want to get. Legally, everything
is "matrimonial assets" and should be divided up. So giving your wife
the savings doesn't change anything. In practice, she can blow it away
on jewellery or whatever, pretend it was her personal stuff, and then
walk out and have half of the equity in the house, plus half your
pension fund, etc. The courts don't like to get involved in "personal
effects" and this sort of thing (the non-wage earning party buggering
off with assets) happens quite a lot.

If you marry, you've got to trust your wife completely and totally. If
you marry and the girl shafts you, you've only got yourself to blame.
I am divorced, got well shafted, but I still think this way. Men just
see a pretty face and nice t**s, and it's about time they screwed
their own heads on :)
 

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