IHT 404 form joint accounts with only one contributor

crislauri

Hello, I have a question regarding joint accounts that my parents had.  My mother and father had a joint account from which they paid all household bills and any expenditures from.  However, my mother never contributed to this account as she was a housewife and did not have a salary.  I've read that if one of the joint account holders did not contribute to the account it is not seen as a joint account from a IHT point of view? so any gifts or expenditures from this account are seen as if only made by my father.  My father passed away and made some gifts to his son and daughter in the last 2 years, so not exempt by the 7 year rule yet. Could half of this gift be attributed to my mother as the gifts were made from the joint account, and as such we only pay IHT on half of the gift and the other half only when my mother passes away which is hopefully not within the next 7 years? 

naedanger

crislauri said:

Hello, I have a question regarding joint accounts that my parents had.  My mother and father had a joint account from which they paid all household bills and any expenditures from.  However, my mother never contributed to this account as she was a housewife and did not have a salary.  I've read that if one of the joint account holders did not contribute to the account it is not seen as a joint account from a IHT point of view? so any gifts or expenditures from this account are seen as if only made by my father.  My father passed away and made some gifts to his son and daughter in the last 2 years, so not exempt by the 7 year rule yet. Could half of this gift be attributed to my mother as the gifts were made from the joint account, and as such we only pay IHT on half of the gift and the other half only when my mother passes away which is hopefully not within the next 7 years? 

I think HMRC would accept that a spouse could own 50% of a joint account even if they didn't contribute half the money. The spouse's contribution is not always financial. However I am not certain so suggest you call HMRC.

Are you sure the estate is liable to IHT? I think when one spouse is still alive it is reasonably rare for an estate to be over the IHT threshold.

xylophone

My mother and father had a joint account from which they paid all household bills and any expenditures from.  However, my mother never contributed to this account as she was a housewife and did not have a salary.  

This was a joint account owned by a married couple and therefore it seems to me that  any money it holds can certainly be regarded as half owned by both since half (or indeed any portion )could be regarded in the light of a gift by your father to your mother as both had equal access and both could use monies in the account to make gifts.

Keep_pedalling

The joint account was a marital asset, so yes their should be no issues that they were not joint gifts. The problem arises with joint accounts held outside a marriage or civil partnership. For instance people set up joint accounts between parent and child’s solely for the convenience of the child being able to mange the parents financial affairs, but with 100% of the account belonging to the parent.

crislauri

naedanger said:

crislauri said:

Hello, I have a question regarding joint accounts that my parents had.  My mother and father had a joint account from which they paid all household bills and any expenditures from.  However, my mother never contributed to this account as she was a housewife and did not have a salary.  I've read that if one of the joint account holders did not contribute to the account it is not seen as a joint account from a IHT point of view? so any gifts or expenditures from this account are seen as if only made by my father.  My father passed away and made some gifts to his son and daughter in the last 2 years, so not exempt by the 7 year rule yet. Could half of this gift be attributed to my mother as the gifts were made from the joint account, and as such we only pay IHT on half of the gift and the other half only when my mother passes away which is hopefully not within the next 7 years? 

I think HMRC would accept that a spouse could own 50% of a joint account even if they didn't contribute half the money. The spouse's contribution is not always financial. However I am not certain so suggest you call HMRC.

Are you sure the estate is liable to IHT? I think when one spouse is still alive it is reasonably rare for an estate to be over the IHT threshold.

thank you, I hope HMRC sees it like that also!