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Category: Tax
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Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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Can I create deed of trust for my saving account and

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Hi, Can I create deed of trust for my saving account and interest payable so my wife can be a beneficial interest owner ?
JA: Have you talked to a tax professional about this?
Customer: no. I need to speak to someone
JA: Anything else you want the Accountant to know before I connect you?
Customer: no
Customer: replied 8 days ago.
basically, I have a good interest income from offshore account which is only on my name. I am married and I believe my wife is having beneficial owner ?
Customer: replied 8 days ago.
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Hi, Sam here , one of the UK tax Experts here on Just Answer, thank you for your question and I shall reply shortly

Hi

May I ask why the need to do this she will inherit them anyway with no affect to your Inheritance tax

Why not just her name onto the account (s)

Thanks

Sam

Customer: replied 7 days ago.
Hi Sam,
Thank you for your reply.I am a higher tax payer and those offshore fixed accounts where opened 4-5 years back on my name only due to problems with her documentations. It is not possible to add my wife's name now. My wife is not higher tax payer and also equally benefited from the earnings. We were married 15 years ago and the investment comes from our both savings.Please let me know if you need further information.Thanks,

Hi

Then why do you wish to make her beneficial owner ?

Im still not sure what you would like to achieve - could you expand perhaps ?

Thanks

Sam

Customer: replied 7 days ago.
Hi Sam,I wish to make her the beneficial owner for these 2 reasons :
(1) She can own the earned saving funds.
(2) If I am the only owner, I have to pay 40p tax on whole income. my wife have to pay only 20p tax.Would it make more sense ?Thanks,

Hi

So what percentage of the savings are hers ?

Thanks

Sam

Customer: replied 7 days ago.
She is posing 50%
Customer: replied 7 days ago.
But the account is only on my name.

Hi

That's not what I asked - what percentage are actually her savings ?

Thanks

Sam

Customer: replied 7 days ago.
Actually her saving is around 40%
Customer: replied 7 days ago.
She put around 40%

Hi

Then the most you can have her entitled to is 40% and you will need evidence that she has contributed 40% of the total capital to allow a deed to be effective

Many thanks

Sam

Customer: replied 7 days ago.
Perfect. That make sense. Thank you so much.
Customer: replied 7 days ago.
Would it be possible if I have given gift to her ?

Hi

No as then it would need to be either see her added into the account or it gifted to her to put in her own account to satisfy the paper trail

Thanks

Sam

Customer: replied 7 days ago.
I understand. If I add her into my saving account from where the money has been invested to the Fixed deposits, would it cover ?
Customer: replied 7 days ago.
I must say - thank you so much for your valuable input.

Hi

That would be fine - that element (savings account) then she would be considered 50% owner its just the account with the fixed deposit you could then make a 40% election on a deed for

You are most welcome

Thanks Sam

Customer: replied 7 days ago.
Thank you so much. I have another question as well please. Just wanted to verify- second opinion.Hi,
I am UK resident at the moment.I have an offshore long term fixed deposit the deposit is lien marked so the interest and principal amount can not be withdrawn until the lien mark is being removed.
Lien mark can only be removed once the offshore loan has been fully paid.
My question is -when is the income tax due on the interest ? when the lien mark is removed or even when I do not have access to the interest ?Thanks,
Customer: replied 7 days ago.
If you wish I can create new question for you. Thank you so much.

Hi

As per Just Answer policy this really should be listed as a new question but I will answer on this occasion

Offshore loan this rings alarm bells - its not a offshore remuneration trust scheme it is with further tax consequences ?

Who placed the lien mark on the account ? Is this due to "loan" repayable now the schemes

have folded?

Sorry to be so nosy but this has consequences if this is the case

Thanks

Sam

Customer: replied 7 days ago.
Hi Sam, Let me explain in bit more detail - this is what I did in the past - (1) Send money to offshore account(fixed deposit) (2) I took offshore loan on the bases of the fixed deposit so they lien marked all the FDs including future Interest(s). (3) The interest is and will not be available to withdraw to me until the offshore loan is fully paid. the value of the offshore loan is not being increased when the interest was added to the FD but not available for me.
So, when the interest should hit my hmrc tax return ?
Thanks again for your help.

Hi

Are you aware many of these are a bone of contention with HMRC and not permitted under UK law as deemed to be tax evasion

So you have to declare the interest as it arises regardless of the fact that the lien sits on the account and its capital

thanks

sam

Customer: replied 7 days ago.
would it be possible to declare the interest now , in this year ? if the interest arrived but not available to me in 2018 ?

Hi

No it has to be declared the date it arises so if awarded sat 01/04/2019 then it would sit as liable in 2019/2020 tax year if paid today 15/09/2020 then liable in 2020/2021

thanks

Sam

Customer: replied 7 days ago.
Thanks for your answer. I have interest income from 2016. and I haven't declare it by the assuming that I do not need to because the money was not available to me. what would I do now ? do I have to disclose this using Worldwide disclosure facility ?

Hi

Yes you do need to declare any interest from 2016 so yes use the worldwide disclosure facility as they are offering lower penalty charges for coming forward through this scheme and declare for all years since this account opened with dates and amounts

Thanks

Sam

Sam, Accountant
Category: Tax
Satisfied Customers: 15689
Experience: 26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
Sam and other Tax Specialists are ready to help you
Customer: replied 7 days ago.
thank you for your reply. what would be the penalty please ? or only interest ?
Customer: replied 7 days ago.
I actually have received the letter to fill "Certificate of tax position" to be completed and returned to HMRC. the letter states that "your overseas assets, income or gains". Do I need to worry ? do I have to pay lot of penalty ?

Hi

I don't know let me check as this is a newish disclosure scheme usually they are set at 30% which actually this is original discloser scheme when it was 30% before Sept 2018 now it can be 100% of the tax due

Full information here https://www.gov.uk/guidance/worldwide-disclosure-facility-make-a-disclosure

Well you made that clear so I could then fully assist you but i'm sure you can appreciate that information was quite vital from the start!

So it will be 100% penalty on the tax due for each year but there might be a maximum of 10% reduction (so down to 90%) this further looks at which territories have which penalties applied

https://www.gov.uk/government/publications/territory-categorisation-for-offshore-penalties

But do read through all the literature to see if you have any of the extenuating circumstances that might permit a reduction

Thanks

Sam

Customer: replied 7 days ago.
thank you. could you please assist what should I put as the self behaviour when I file the disclosure ?
Customer: replied 7 days ago.
100% penalty means I have to pay tax double right ?

Hi

I cant advise what to put - why didn't you disclose it ? When it was your account that earned the interest and regardless what then happened with it, it was awarded to you so tell them the reason - that you thought as you didn't get it that it wasn't treated as yours but be more specific

100% penalty yes so if you owe £1000 tax the panely will be £1000 too

Thanks

Sam

Customer: replied 7 days ago.
Thank you. So we also need to add interest as well right ?

What does the enclosure form state ?

Thanks

Sam

Customer: replied 7 days ago.
You are right it’s both.
Customer: replied 7 days ago.
Can we do the cash accounting for saving interest ?

I don't understand - it is cash accounting as when awarded rather then when paid

Thanks

Sam

Customer: replied 7 days ago.
pls

No it already is cash accounting as you treat it as arising when due not when paid

Thanks

Sam

Customer: replied 7 days ago.
Just to let you know the money has not hit my saving account. It’s still with the security

Hi

It doesn't matter its been awarded over the years

Thanks

Sam

Customer: replied 7 days ago.
Thank you for all your help. Much appreciated.

You are very welcome

Thanks

Sam