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Where Taxpayers and Advisers Meet

account in parents' name

gordon99
Posts: 5
Joined: Mon Jun 24, 2019 3:09 pm

account in parents' name

Postby gordon99 » Mon Jun 24, 2019 3:18 pm

Hello,

I have been working away from the UK for a number of years. I transferred some of my savings from working abroad back to my UK account. My parents then opened a savings account in their name with this money after I transferred it from my UK account to theirs. When the savings account expires they will then transfer the initial sum plus interest back to my account. Would this payment from my parents to me then count as a gift back to me for inheritance tax purposes? That would seem very odd because at least for the initial sum they would only be paying me back.

Thanks

pawncob
Posts: 4293
Joined: Wed Aug 06, 2008 4:06 pm
Location: West Sussex

Re: account in parents' name

Postby pawncob » Mon Jun 24, 2019 4:55 pm

I'd guess the intent was that your parents were investing this on your behalf, and were merely acting as agents (bare trustees) for you. Depending upon the amounts involved and who declares the interest to HMRC, you should be OK.
With a pinch of salt take what I say, but don't exceed your RDA

gordon99
Posts: 5
Joined: Mon Jun 24, 2019 3:09 pm

Re: account in parents' name

Postby gordon99 » Mon Jun 24, 2019 6:16 pm

Thanks for that pawncob, very helpful. Just to be doubly sure here.
The amount is £50,000 and the interest will be about £500 or so. I don't think my parents would be liable for any tax on this interest but I would be liable at the 40% rate of tax if the account was in my name. Is there anything that I need to do eg fill out a self-assessment tax form to say this money is actually mine and I should pay tax on it?

maths
Posts: 7537
Joined: Wed Aug 06, 2008 3:25 pm

Re: account in parents' name

Postby maths » Mon Jun 24, 2019 7:13 pm

Either you gifted the monies to your parents OR you (for some reason?) asked them to deposit the monies in their account t but on the clear understanding they were acting as your agent/bare. trustee.

Why did you do this?

gordon99
Posts: 5
Joined: Mon Jun 24, 2019 3:09 pm

Re: account in parents' name

Postby gordon99 » Mon Jun 24, 2019 7:20 pm

I asked my parents to deposit the money in their account on the clear understanding they were acting as my agent/bare trustee. I did this because the money was sitting idly in a foreign current account earning no interest. The idea was to earn some interest from having the money invested in the UK. Does that clarify it?

pawncob
Posts: 4293
Joined: Wed Aug 06, 2008 4:06 pm
Location: West Sussex

Re: account in parents' name

Postby pawncob » Tue Jun 25, 2019 10:31 am

Obviously it was easier for your parents to arrange a UK deposit account, rather than you trying to do so from a foreign country :roll:
If you declare the interest, I think it will confirm the position.
With a pinch of salt take what I say, but don't exceed your RDA

gordon99
Posts: 5
Joined: Mon Jun 24, 2019 3:09 pm

Re: account in parents' name

Postby gordon99 » Thu Jun 27, 2019 11:07 pm

Thanks for the information. I am intending to declare the interest in the next tax year. One final question- does it make any difference that most of the money was used by my parents to set up ISA accounts?

pawncob
Posts: 4293
Joined: Wed Aug 06, 2008 4:06 pm
Location: West Sussex

Re: account in parents' name

Postby pawncob » Fri Jun 28, 2019 10:53 am

Well that changes things.
If the money is in an ISA it's personal to your parents, so all of the above is irrelevant.
There's no tax due (it's an ISA)
Yes any return of funds to you will count for IHT purposes.
With a pinch of salt take what I say, but don't exceed your RDA

gordon99
Posts: 5
Joined: Mon Jun 24, 2019 3:09 pm

Re: account in parents' name

Postby gordon99 » Fri Jun 28, 2019 11:25 am

Thanks for the clarification pawncob. Does this mean both the interest from the ISA accounts and the original sum I gave to my parents would be counted as a gift when returned back to me (or would the gift just be the interest)? Is there any way to close/cancel the ISA accounts such that the original sum I gave to my parents would not count as a gift? I would much rather receive no interest and simply have the original sum returned to me rather than have the interest and all the funds returned back to me counted as a gift.

pawncob
Posts: 4293
Joined: Wed Aug 06, 2008 4:06 pm
Location: West Sussex

Re: account in parents' name

Postby pawncob » Fri Jun 28, 2019 11:32 am

Any funds returned to you will be counted as a gift (unless within exemptions).
With a pinch of salt take what I say, but don't exceed your RDA


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