To think it can be more tax-efficient for savings to be in a lower-earning spouse’s name?

[WaryKhakiMentor]

For couples where one person pays a higher rate of tax and the other earns less, it seems like it could be more tax-efficient for savings to be held in the lower earner’s name. Given allowances and tax bands, I’m wondering whether this is something people commonly do in practice.

AIBU to think this is the more sensible approach?

Yea provided the relationship is stable. I've used DH's cash ISA for last year and stocks and shares ISA allowance this year as well as my own to reduce the tax on my capital. We'll also look into non ISA savings.

We’ve done this for years. At the beginning, he was the lower earner, now I am.

I’m a tax accountant and yes, this is a pretty standard tax planning suggestion.

Yes, all our savings have always been in the name of the lower earner in our marriage.

Yes that’s what we’ve always done.

Yes that's what we did for years. However as we got older legal advice was to aim for a more even split in case of the demise of the one holding all the money.

Yes. Defer to the lower tax band payer.

Yes. I have a lot of savings in my name. And if you earn less than £17.5k you can have more than the £1k allowance for interest. Up to £5k!

https://www.gov.uk/apply-tax-free-interest-on-savings

Yes very normal. All our savings are in my name as subpar additional rate.

And that’s what I have started to do as well as it makes no difference with ISAs.

What happens if “out of the blue” the one with the majority of the savings decides to leave you?

Yes we’ve also done this for years.

We've always used both ISA allowances but never managed to max both out so not got further than that.

I think it’s like any asset and needs to shared. Technically. But yes someone could blow it all!

That’s a risk I could never take. I’ve always had separate bank accounts and savings and when I left my partner, I was so glad!!!

Yes it’s standard tax planning advice as well as making use of pensions and ISAs.

Riskier for sure if you’re not married.

Then I’ll be laughing 😉

Always done this. When I was a sham all money was in my name.

We've been together 50 years so that's unlikely but it's definitely something to consider if you're younger. However in the majority of cases it's likely the woman who is in the lower tax bracket so in my case if he upped and left I'd be holding all his money.

Also, my DH earns a lot of money and has also maxed out his ISA allowance so if I left him he wouldn’t actually be short of a bob or two, even if the non ISA savings are in my name for tax reasons.

You would be ok then!! 🤣

We're married, so it would get shared on divorce. And honestly, DH has no idea what accounts the savings in his name are in. If he left me, I could easily have emptied them before he even figured out what banks he needed log in details for.

Snap!

That’s me at the moment. Had to ask me to transfer him some cash for an investment (tax efficient one that’s better for him to do!) the other day.
I am nice enough to have them on a spreadsheet should I die, but he can’t access them currently.