Kaupthing Edge: no joint accounts

plbj5

Over the past few days I have applied for the MSE recommended high interest account with Haupthing Edge. All went smoothly until I asked why the website would not allow me to set up a joint account. The answer is: Haupthing Edge do not provide on-line joint accounts "at this time". They have no date for when this will change.

The implication for spouses is all to do with Inheritance Tax. Our understanding is that any money in a single-named account will be regarded by the Revenue as part of that person's personal estate. So on that person's death such money passing to the spouse will be deducted from the survivor's IT allowance and could be taxed at 40%. Whereas money in a joint account bearing the names of both spouses passes to the surviving spouse without attracting IT.

All this amounts to a VERY good reason for spouses NOT to invest their savings with Haupthing Edge .... unless someone out there knows differently.

debbie42

plbj5 wrote: »

The implication for spouses is all to do with Inheritance Tax. Our understanding is that any money in a single-named account will be regarded by the Revenue as part of that person's personal estate. So on that person's death such money passing to the spouse will be deducted from the survivor's IT allowance and could be taxed at 40%. Whereas money in a joint account bearing the names of both spouses passes to the surviving spouse without attracting IT.

I'm a bit puzzled by this. My understanding is that any assets left to a spouse are exempt from inheritance tax, regardless of whether it is in a joint account or not. The recent changes meant that allowances were effectively combined if a spouse died, such that the remaining spouse had double the allowance (600K?). OK, if the spouse had more liabilities than 300K left to someone other than their spouse it might get taxed earlier, but it may still attract tax eventually?

I have no worries whatsoever about having cash in my own name in any account as it attracts less tax while I'm alive.

Jonbvn

debbie42 wrote: »

I'm a bit puzzled by this. My understanding is that any assets left to a spouse are exempt from inheritance tax, regardless of whether it is in a joint account or not.

From the HMRC website (Form IHT206):

Broadly, assets that pass to the deceased's spouse or civil partner or to charity are exempt from inheritence tax. (there are some conditions to this)

Given the above, there is absolutely no reason why a joint account is necessary to avoid IHT between spouses.

lolly5648

I also applied to Kaupthing Edge and received the reply that they are not offering joint accounts at this time. Our reason for having everything in joint a/cs is easy access after one person dies.

When my friend's mother died her father could not access the bank account until after probate even though everything was left to him. He had never dealt with the money side of things as his wife was very capable and 12 years younger. He had to borrow money from my friend to pay bills as the bank was very inflexible.

The moral of this story is that if you have separate bank accounts and one person dies don't tell the bank until after probate so that at least any standing orders are still paid.

(This might not be legal - I don't know))

plbj5

Many thanks for the very helpful replies so far.

Our concerns over IHT arise from an experience a few years ago as executors to a will. The deceased and his spouse had joint accounts with one exception, which was only in the name of the deceased. In that single case the Revenue determined that the money in the account was not shared but was in fact a personal asset of the deceased and therefore fell outside of the Spouse's exemption. So even with last year's changes to the rules over these exemptions, at the very least it seems to us that monies in such an account would lead to a reduction of any allowance passing to the surviving spouse.

Were we in our twenties or thirties we may not be overly concerned, but as we are well into the second half IHT is looming large for us!