This week we will tell you a tax saving story.
Mr and Mrs A is a lovely couple. Mr A has a great job that he loves and pays well while Mrs A doesn’t work and takes care of the family.
Mrs A doesn’t need to work because Mr A is a highly paid individual and is a additional rate tax payer i.e. pays tax at 45%.
Mr A is also a keen saver and put aside a decent amount of his monthly income in a savings account which produces an interest income of £10,000 per year. As he is a higher rate tax payer he pays £4500 in taxes which gives him a net interest income of £5,500.
Mr A uses this money and takes the family on a basic holiday.
One day Mr A was browsing through his Facebook and noticed the Taxserve tax tip with a subject of use tax to pay for your holiday. This caught his attention and he decided to contact his accountant before the yearend for a change. The accountant advised him to transfer the savings into an account in Mrs A name and by utilising her personal allowance the whole interest of £10,000 could be received tax free.
This means a potential savings of £4500 in taxes.
This year, Mr A took the family on a luxury holiday.
What kind of holiday would you take your family?
Please note: This doesn’t not constitute as tax advice. Professional advice must be sought before any tax planning. The tax planning may differ based on your individual circumstances.