Joint bank/saving account and Tax liability

Niglov

Hi,

I have a Santander123 account giving 3% on £20,000 + cashback. I want to open a second (joint) account with my daughter with a further £20.000. The interest is paid net of tax and we are both basic rate tax-payers.

I receive my private pension net of tax and propose to pay it into the joint account while my state pension will go into my main account..

I am very unclear about the tax position for my daughter in this case. As both pension and interest are paid net of tax will there be any other tax liability for my daughter? The level of income will not put either of us into the higher rate tax band.

colsten

20% tax on all interest earned will automatically be withheld and neither of you can claim it back as you are both BR tax payers.

There should be a change from next April, when BR tax payers will be entitled to earning £1,000 in interest per year without paying tax. How exactly this will work hasn't been announced yet.

Niglov

Hi,

So, as long as my pension and the Santander account interest is received net of tax then neither my daughter or I need to worry about any other basic rate tax liability?

Is that correct?

badger09

It is only the interest credited to the joint account which is relevant to your daughter's tax liability.

As you are both basic rate taxpayers, there will be no further tax to pay.