From: "Black Hole \(@\)" 
Newsgroups: uk.finance
Subject: Re: Tax on Endowment Compensation Interest
Date: Fri, 01 Sep 2006 19:00:11 GMT

"Peter Saxton"  wrote in message
news:5mugf2pdvie7b9i8cbgpqskgnphl5qodu8@4ax.com...

> On Fri, 01 Sep 2006 01:58:17 GMT, "Black Hole \(@\)"
>  wrote:
>
> >If I were to be awarded compensation for a mis-sold endowment policy
which
> >was surrendered a year ago, my understanding is that the award would have
a
> >years interest added to it to compensate for not having had the use of
this
> >money for the past year.
> >
> >My understanding is that this interest is liable for tax, in the same way
> >that bank/building society interest is.
> >
> >It seems that the cheque will be made out to both me and my wife (as
joint
> >policy holders of the mis-sold and now surrendered endowment policy).
> >
> >If I am a higher rate taxpayer but my wife is a non-taxpaying housewife,
can
> >I legitimately avoid (not evade) being taxed on this interest by either
> >getting the cheque made out solely in my wifes name, or by paying it into
> >her bank account?
> >
> No.
>
> >Regards
> >
> Look at this
>
> http://www.hmrc.gov.uk/bulletins/tb72.htm
>
> -- 
> Peter Saxton from London
> peter@petersaxton.co.uk

I'm aware of Tax Bulletin 72 and have a copy of it, however, I think you may
have missed the point of my question.

If I put £10000 in a savings account in my name, the interest will be taxed
because I am in full time employment and therefore use up all my tax
allowance each year. My wife doesn't earn anything, and so she has her full
tax allowance to play with. This means that she can "earn" a lot of interest
before she has to pay any tax. It therefore makes sense to ensure that all
our savings are in her name (I trust her not to bunk off with it).

What I'm asking is whether I can treat any interest element of whatever
award may be made in a similar way and assign it all to my wife so
collectively we pay no/little tax on it. Do I need to ensure that the award
is made out solely in her name to ensure that the Inland Revenue don't come
after me for a slice of tax?

Regards