TSB Classic Plus Account and Tax

bugbyte_2

My wife and I have around £3500 to save. My DW is in the 20% tax band and I am in the 40%. My wife has opened a TSB Classic Plus account and funded it with £2000, and will set up standing orders to transfer £500 in and out to get the 5% (4% after tax) interest.

Am I right in thinking my wife can set up a second Classic Plus account as a Joint account with me?

If she is the first named person on the joint account will TSB apply the 20% tax, or will it be 40% because I am still named?

Thanks in advance.

thebritishbloke

Doesn't matter who opens the account, the interest will be treated as though it's split equally between you. So 40% tax on your half and 20% on her half. I think you'll have to deal with paying this tax at the end of the year though.

YorkshireBoy

Unless she already has one, why doesn't she open a Nationwide FlexDirect account in her sole name instead?

The same 5% AER rate, albeit only for 12 months, but crucially only 20% tax payable.

She could then set up a pair of cross-firing £1K SOs between those two accounts.

If you'd thought of this a couple of weeks ago, she would have been able to open two sole TSB accounts...but the rules changed at the end of last month.

Consumerist

TSB will deduct 20% tax on all interest earned and you will need to arrange payment of the remaining tax due to HMRC via your tax return.