How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask bigduckontax Your Own Question
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4953
Type Your Tax Question Here...
bigduckontax is online now

Two questions: 1. My wife and I have been saving with two

This answer was rated:

Two questions:
1. My wife and I have been saving with two building societies. These savings are now mature and I have arranged for cheques to be sent to me. This money is for my step son but to be held by us and paid to him as and when he requests it. This is because, wisely, he does not trust himself to be measured and appropriate with his spending if he receives a lump sum.
What are the tax implications? How and where should this money be declared?
2. Three years ago we invested £100,000 in spread share schemes. The two main providers are Capita and Octopus. I hadn't realized that annual interest from these should be declared annually and have not included them on my tax returns. It's come to my attention this tax year that I should have done so. How might I put this right and explain to Inland Rev? (n.b. The 100K was part of an inheritance on which all due inheritance tax has been paid.)
Thanks Robin

Hello, I am Keith, one of the experts on Just Answer, and happy to help you with your question.

The interest on these building scoiety accounts, unless they are cash ISAs, must, of course, be declared for Income Tax purposes. Otherwise there is no requirement to declare these moneys, nor their ultimate payment to your step son. The UK dooes not have a gift tax regime. Just thank your lucky starts you don't live in France where gift tax kicks in a 5K euros.

The Inland Revenue crased to exist some years ago when it merged with HM Customs and Excise to form HMRC. You should advise your tax office of the error in your self assessment tax returns and amend them. HMRC may charge you interest on the underpaid tax and may, and I only say may, impose penalties, but I think the latter course rather unlikely as the policy on the imposition of penalties is under change.

I do hope that I have been able to set your mind at rest on these matters.

bigduckontax and other Tax Specialists are ready to help you

Thank you for your support.

My last post paragraph 2, line 1 delete 'scoiety' insert 'society.'

Paragraph 3 line q delete 'crased' indert 'ceased..'

I should perhaps have mentioned that although the UK does not have a gifts tax regime any gift over 3K in one year would create a Potentially Exempt Transfer (PET) in your Inheritance Tax (IHT) account. PETs run off at a taper over seven years and in the event of your demise in that period are added back to your eatate and are the first to suffer IHT. If your estate is insuffcient to meet the IHT on the PET it cascads down to the beneficiary for immediate payment. IHT does not kick in until assets on death exceed 325K, at 40% on the surplus, and inter spousal bequests do not count. The classic defence is a reducing term life insurance policy on the donor.