Paid too much tax from interest on joint account

Mr_Reeman

[FONT=&quot]I've always been employed full time paying tax through my employer vai PAYE[/FONT]
[FONT=&quot]When my wife and I had our first child in 2014, I was earning below £50,000 so took the Child Benefit on offer.
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[FONT=&quot]After a year I started to earn over £50,000, my wife went back to work part time earning less than £10,000 per year.[/FONT]
[FONT=&quot]After I started earning over the £50K threshold for child benefit, I started completing Self-Assessment to pay the extra tax from the Child Benefit.[/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]We’ve got quite a bit of money in a Santander account, and as part of the Self-Assessment process I’ve declared the interest earnt in this account each tax year. However, I suddenly thought this is a joint account. The money in it is from a mixture of savings from my wife and my earnings each month to pay our monthly bills. So, I’ve paid tax on the interest at a higher tax rate, when actually not all the money is mine. My wife has continued to work part time and doesn’t earn more than £10K a year.[/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]Should I be paying the higher rate of tax on the interest in the joint account and if not, can I claim back some of the tax I’ve paid over the last few years?[/FONT]

Keep_pedalling

Interest on joint accounts is split 50/50 as far as tax is concerned, so you should have declared only half of it.

You should get all you cash savings in her name only.

xylophone

I started completing Self-Assessment to pay the extra tax from the Child Benefit.

Had you thought of increasing your pension contributions?

https://www.ft.com/content/a95f71d6-921f-11e7-a9e6-11d2f0ebb7f0



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Sir Steve Webb, director of policy at Royal London, said:For a higher-earning family, putting money into a pension is already a very attractive option. They benefit from higher rate tax relief on their contributions and may also get a matching contribution from their employer.

But what they may not be aware of is the additional advantage of reducing the tax charge they face as a higher income family receiving child benefit. This is another reason for families in this income bracket to prioritise pension saving and to take advice about their options.

Mr_Reeman

Thanks both.
Interesting on the extra pensions bit. I already do quite a bit with my pension contribustions, plus salary sacrifice, so my taxable income is a lot less than the headline amount. Maybe a small change could reduce it to be below the 50K figure. I will investigate some more.

Dazed_and_confused

There are specific time limits for Self Assessment so you may be able to amend your 2016:17 return (and 2017:18 if already submitted) but would have to claim overpayment relief for any earlier tax years where you have declared the wrong income.

https://www.gov.uk/self-assessment-tax-returns/corrections

Remember that any reduction in your income could benefit you in two ways,
A). Less higher rate tax to pay on the interest
. Lower "adjusted net income" will mean less Child Benefit Charge

You should also make sure your wife declares the income to HMRC. As a low income earner she is unlikely to be able to make use of the Personal Savings Allowance but for years where tax was deducted from the interest she is likely to be due a refund of the tax on her share of the income for one of two reasons,
A). She has unused tax allowances
. The income might fall to be taxed at the starter savings rate of tax (0% )