Paying No Tax On Post Office Bond

daveoc22

I have a joint bond with my wife who will shortly become a non-taxpayer.

I thought that she would just need to complete an R85 to make her half of the interest tax free but it seems you cannot do that on a joint account with the post office.

According to their savings guide, under the section 'how can you register as a non tax payer', it says 'for joint accounts both account holders must register as non-taxpayers before interest can be paid without deduction of tax'.

As I am a tax-payer under PAYE am I correct in thinking the only way for my wife to get her half tax free would be for me to sign a R85 as well and then fill in a tax form at the end of the year declaring the interest.

The amount of interest probably would make this not worth it, but it just seems odd that all the other places I'm dealing with are happy to accept just the one form signed by her to allow half the interest to be tax free.

Anybody with joint Post Office accounts confirm that is the case.

alanq

An R85 can only be completed by someone who does not owe any tax. If a taxpayer signs, HMRC will be displeased (at the very least) even if the interest is declared later. It will then instruct PO to cancel gross interest immediately.

Your wife should pay the tax then it will be refunded when she completes her next tax return. Alternatively she can complete an R40 to reclaim any overpayment.

http://www.hmrc.gov.uk/forms/r40.PDF

daveoc22

alanq wrote: »

An R85 can only be completed by someone who does not owe any tax. If a taxpayer signs, HMRC will be displeased (at the very least) even if the interest is declared later. It will then instruct PO to cancel gross interest immediately.

Your wife should pay the tax then it will be refunded when she competes her next tax return. Alternatively she can complete an R40 to reclaim any overpayment.

http://www.hmrc.gov.uk/forms/r40.PDF

Ah, thanks.

Seems odd that the Post Office should be telling potential tax-payers that they need to sign an R85----looks like the R40 is the route to go, though why the PO cannot have a simpler system I don't know.

Thanks Again

FatherAbraham

daveoc22 wrote: »

Seems odd that the Post Office should be telling potential tax-payers that they need to sign an R85----looks like the R40 is the route to go, though why the PO cannot have a simpler system I don't know.

It is simple. For the Post Office.

Warmest regards,
FA

daveoc22

FatherAbraham wrote: »

It is simple. For the Post Office.

Warmest regards,
FA

Yes, it does seem that their rules are set up to make it easier for them rather than their customers.