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Help with savings account and taxes please?

(5 Posts)

DH and I have a joint checking account and a joint savings account. DH is on the top band for his taxes, so interest on our savings account gets taxed into oblivion. We don't have a huge amount of savings (think hundreds rather than thousands!) but begrudge the taxman getting his mitts on a penny more than necessary.

I have my own checking account, if we close our savings account and I open one in my own name instead, is it OK to put our savings in there and just pay the basic tax? As all the money will be transferred from our joint account, I just want to make sure there won't be any repercussions from the tax office.

CogitoErgoSometimes Tue 22-Jan-13 15:16:26

There's nothing stopping you putting all your savings in your name. Does he declare the interest on this few hundred on a tax return that he gets 'taxed into oblivion' rather than just the straight 20% at source? Most people wouldn't bother for what must be just a couple of quid.

Have you thought about opening an easy-access Cash ISA? You can have one each, deposit up to £5640 each tax year (a little more starting next year), enjoy tax-free interest and withdraw money when you need it with no penalty

TBH we've never been able to save money before so we haven't even looked at an ISA. Our 'savings' has been somewhere to put a bit extra money every month so we can pay things like the car servicing and house repairs, the balance hovers between £500 or so, and zero! It's only now that we are starting to be able to actually put money away without knowing we'll need it in a couple of months.

We'll look at ISAs, thanks for that. We are completely in the dark about savings options (lived abroad for years).

CogitoErgoSometimes Tue 22-Jan-13 16:33:27

There are a lot of simple Cash ISAs that you can manage online. If you take an easy-access one out with your regular bank you can transfer money in and out relatively painlessly whilst enjoying tax-free interest at a slightly better rate than a straight savings account. The only limitation is that your total deposits in the tax year do not exceed the allowed maximum. If you'd like more information here's some good Banking and Savings Advice

Thanks Cogito, good advice.

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