Joint Savings Accounts - sharing Tax Free Interest

dougieskins

I have a Joint Savings Account with my partner and am just wondering how the tax free interest allowances work. 

I'm on the Higher rate of tax, so only get £500 tax free interest. My partner is currently on Maternity leave, receiving statutory maternity pay which falls below lower rate of tax. Does this mean we currently have a combined £5500 tax free interest allowance? And when my partner returns to work and is back on Basic rate of tax, this drops down to £1500 tax free interest allowance?

Bigwheels1111

Im no expert in this but from what I've read on here its split 50/50.

So open a new savings account in the wifes name and put the cash there.

Take advantage of her allowance.

eskbanker

dougieskins said:

I have a Joint Savings Account with my partner and am just wondering how the tax free interest allowances work. 

I'm on the Higher rate of tax, so only get £500 tax free interest. My partner is currently on Maternity leave, receiving statutory maternity pay which falls below lower rate of tax. Does this mean we currently have a combined £5500 tax free interest allowance? And when my partner returns to work and is back on Basic rate of tax, this drops down to £1500 tax free interest allowance?

Taxation is dealt with individually, not combined, so the interest from joint accounts is split 50/50 and then measured against the allowances and nil-rate bands applying to each person, i.e. your £500 PSA offsets your 50% share of the interest and her share forms part of her own separate tax calculation.

Albermarle

Bigwheels1111 said:

Im no expert in this but from what I've read on here its split 50/50.

So open a new savings account in the wifes name and put the cash there.

Take advantage of her allowance.

OP - This is the best way, as long as you trust her not to spend it all.........