My bank account shows a lot of income that isn't really income

[Holidayfix]

I've recently retired on a FIRE basis. This means I have a small (very small) pension income, a tiny income from a very part time job, but mostly I'm living from savings and savings income, mostly in ISAs so no tax due on the interest income.

My taxable income is below the personal allowance, so I am currently a non tax payer, having until recently been a higher rate tax payer. My "spending power" is higher because I am transferring money to spend from savings and investments, but that's OK, I can show where that has come from, and that no tax is due on it.

I have a friend/companion that I do a lot of travelling with. Usually when we are away, I put everything on my credit card and we split it all when we get back. It just makes things easier than saying you got lunch today, I'll get it tomorrow or splitting the bills, and we're both very happy with the arrangement.

We use my card because I have one with £0 overseas charges and he doesn't do credit, having previously got himself in a mess. I pay mine in full every month.

Anyway, I am concerned that these payments from him look like an income and that "someone" might think I need to pay tax on it. Is that likely? It will amount to several thousands over the course of a year.

Keep clear communication about him paying you back + copies of receipts? Then it’s obvious it’s a cost share rather than income?

tbh I would just stop putting it all on your card, appreciate you’re happy with the arrangement but if it’s going to lead to extra admin in terms of keeping receipts and bits, is that worth not having to sort splitting bills?

My friends and I use an app when we go away together so we can each pay for different bits and then it figures out the balance as to who owes what at the end. That sounds like a better solution for you both? If we take it in turns to pay there's usually only a small amount left to "settle up"

That sounds interesting. What is the app?

It's easy enough to keep a tally becuase it's all on the bank statement at the end of the trip.

HMRC don't (yet!) have those kind of powers to look into bank accounts and if you're not claiming UC then I can't see how it would be relevant how you conduct your affairs. Anyway, sounds like you'd have a paper trail evidencing what you've done so you'll be absolutely fine. Enjoy the holiday.

Yes I use Splitwise, it’s very simple to use!

I don't know but they know everything about my interst income in bank accounts!

Splitwise is the app, and it’s brilliant. You just record everything that anyone spends and it automatically calculates at the end who owes who what. You can use it for a group and it takes all the stress out of working out who owes who.

I wouldn’t worry about it if you have the CC statement and can prove it’s his half.

What CC do you use abroad? Does it give good interbank exchange rates?

HMRC know about the interest because the banks are obliged to report it to them.

That's because banks are duty bound to report interest on savings to them or millions of people wouldn't even realise they have to pay tax on it. They aren't bound to report anything that looks like it could possibly be income.

Absolutely this, don’t pay it too much mind, you are operating with visibility and clarity so it’s a non issue so far as I can see, and I would do the same!

Splitwise, as others named above. Sorry was half awake and couldn't remember the name of it!

The difference is you can each take it in turns to pay and then there is a lot less of a "balancing payment" required at the end of the trip

Would an exception to this be during probate? I am trying to pay my DD back some money on behalf of her sister (a debt from 20 years ago with no clear paper trail). Not sure how to go about it.