Managing a non UK resident's money: Is this tax free?

Suppose a close foreign friend entrusts a UK resident with a large sum of money to safely invest in high interest savings accounts in the UK, given that the interest rates in their country of origin is low. They are not UK resident.
Bank accounts are then opened up in the UK resident's name with the box for gross interest payments (and possibly a R85 form) checked. Every month, the interest is collected and sent to a UK bank account of the non-UK resident.
The person managing the money is not expecting any regular payment for their service. An occasional gift of gratitude is possible.
Is this setup entirely tax free? Assume all the necessary documentation can be obtained, e.g. letters saying that "I am allowing X to manage my money, and they do so entirely out of goodwill."
Reply to
Dan Green

It is generally frowned upon, I think, to operate bank accounts in a name of someone other than the owner. What would happen if the "manager" dies and his executor is unaware of the arrangement? Then the non-resident would lose all the money and it would go to the other guy's heirs.
I assume you mean this account would be in the non-resident's name. If *that* account can be in their name, then why can't the savings accounts also be in their name? Why keep them in the resident's name?
"Gift of gratitude" is usually taken to mean that the gratitude itself (kind words, or perhaps a hug) is the gift. It doesn't mean that something tangible is given by way of gratitude (e.g. flowers, chocolates, a villa in Spain).
Anything tangible could, if valuable enough, be deemed to be not a gift (which would be tax free) but a fee (which would be taxable income).
You could view the arrangement as the UK resident borrowing money from the non-resident, and paying them interest, then investing it in his own name, and using the interest thus earned to fund the interest he pays the non-resident. So long as the resident makes no profit from this, i.e. if the interest coming in equals the interest going out, no tax will be due from this venture.
But this arrangement would only make sense if the resident were a non-taxpayer. Otherwise the incoming interest would suffer deduction of tax.
Reply to
Ronald Raygun
Hi Ronald,

Of course this is just a matter of updating the will accordingly.
There may be a variety of reasons for this, such as the non-resident being retired and often away on holidays, and not wanting to manage the accounts and watch the money.
Some high interest accounts will pay the gross interest and leave the tax declaration to the account holder. If no tax is due if "the interest in = the interest out", then presumably it won't even need to appear in the tax declaration forms?
Reply to
Dan Green

Not really. The will concerns itself only with how the testator wishes his assets to be distributed. But first all debts need to be discharged, and what is happening here, pressumably, is that the "manager" owes the funds to the non-resident. Hence this needs to be dealt with outside of the will.
But the accounts could still be managed by the resident even though they are in the non-resident's name. It's simply a matter of the former being given authority to do so on behalf of the latter.
Yes it will. There are two taxable issues here. The "in = out" only means there is no tax due on the resident's profit, because there is no profit. But there is still the basic interest coming from the bank. This will be taxable on the account owner. If the account is in the resident's name, and the resident is a taxpayer (that is to say his total income from all sources exceeds his personal allowance) then, in the case of an account which normally pays interest net, no R85 can be completed and, in the case of an account which pays interest gross, tax may have to be paid on this later.
Reply to
Ronald Raygun

BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.