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

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.

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

So, in terms of Inland Revenue and Legal purposes, this would be OK ??

Thanks

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".

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

Bitstring , from the wonderful person Daniel said

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.

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.

What exactly do you mean by "legal purposes"?

I mean is it completely legal for Inland Revenue purposes ??

Thanks Daniel

Sorry, I'm a bit confused by your answer ?? - What do you mean by 'Gift it to the pot' ?

Thanks

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)

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.

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'?

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.

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.

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.

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

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 :)