current account/savings account tax question

lauxy

Hi I have a santander 123 current account which is a joint account with my husband. I also have a santander esaver in my name.

Our esaver is coming to the end of its good interest rate and I am thinking of transferring our savings into our 123 account so they can earn 3% interest (we have 20K)

I am not earning enough income to pay tax.

So the esaver in my name meant that I wasn't taxed on the interest. If I move our savings into the joint account is there a way to stop the interest being taxed? Even if it was only on half of it? Or is it that because our account is joint we are automatically taxed on any interest?

saintalan

Hi Lauxy & welcome to the forum.

First when you say "we have 20k" is that including the transferred amount? If not remember there is a 20k limit on that account.

Either way why not open another 123 a/c via Quidco and get £55 cashback and keep it in your own name send in the appropriate Tax Form and get interest paid Gross.

Also have you got an ISA? Not that that will offer a better rate.

Cheers

Alan

eskbanker

Joint accounts are taxed on a 50/50 basis, see http://www.hmrc.gov.uk/manuals/saimmanual/saim2420.htm

However, if you're currently below the tax threshold, I believe you'd be able to reclaim your half of the 20% tax deducted by default unless of course your 50% share in the interest takes you into an income tax-paying bracket.

lauxy

Thanks for your replies!

we have more than 20k my husbands salary gets paid into the 123 account every month so the idea of opening another in my name makes sense. I do have a couple of isas I opened last year and the year previous which are fixed rate ones (I have not yet invested this years allowance) but cant find one that would give as good a rate as 3% this year.

xylophone

Register R85 for non-taxpayer on the joint account provided Santander allows.

saintalan

lauxy wrote: »

Thanks for your replies!

we have more than 20k my husbands salary gets paid into the 123 account every month so the idea of opening another in my name makes sense. I do have a couple of isas I opened last year and the year previous which are fixed rate ones (I have not yet invested this years allowance) but cant find one that would give as good a rate as 3% this year.

Hi again, I obviously don't know your circumstances so it would depend on whether your savings plans are short/medium/long term but you might want to consider a Stocks & Shares ISA in a fund. If this is all new to you, you might want to view a few other threads on the forum especially this one.

Cheers

Alan