Overview
- Lewis told viewers that spouses and civil partners can transfer savings or assets between themselves without tax to use the lower earner’s allowances.
- He explained the Personal Savings Allowance gives basic-rate taxpayers £1,000 of interest tax-free and higher-rate taxpayers £500.
- In his Val and Tine example, shifting savings cut their combined interest tax from £400 to £100 by moving income to the 20% taxpayer.
- At roughly 4.5% interest, a higher-rate payer hits the threshold at about £11,500 of savings, versus about £23,000 for a basic-rate payer.
- The approach also applies to dividends and capital gains, with annual tax-free amounts of £500 for dividends and £3,000 for gains, and can be enhanced by using ISAs.