Savings Account in joint names and the Personal Savings Allowance

Stuart_W
Stuart_W Posts: 1,711
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edited 3 November 2023 at 12:38PM in Savings & investments
Am I correct in thinking that where a savings account is in joint names, the Personal Savings Allowance is applied equally to both parties (50% to each) - or can you choose to "allocate" it to one or the other in respective tax returns, as long as it is all accounted for? I have read conflicting advice.

Some of the savings my wife and I have are in joint names, some isn't, and the gradual increases in interest rates are pushing our annual interest income closer the the PSA limit for one person but not two so I want to make sure we're not caught out. 

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  • xylophone
    xylophone Posts: 43,894
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    https://www.gov.uk/hmrc-internal-manuals/savings-and-investment-manual/saim2420#:~:text=Where a savings account or,equally between the account-holders.

    SAIM2420 - Interest: taxation of interest: joint accounts

    Where interest arises on an account held in the joint names of spouses or civil partners, each will normally be taxable on half of the interest, under ITA07/S836. Where, however, their beneficial entitlement to interest (or any other income from a jointly owned asset) is not actually 50:50, they may elect to be taxed on their actual entitlement. Detailed guidance on jointly held property, previously found at TSEM9805. Note that certain cases require referral to: Mailbox, Trusts Technical (CS&TD).

  • Notepad_Phil
    Notepad_Phil Posts: 1,326
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    I assume the above means that if someone put in 90% of the funds then they could elect to receive and be taxed on 90% of the interest. So not a general allowance to allow a couple to direct interest in whatever fashion they would like -  I guess someone doing so may well also increase the chances that the HMRC decide to do a bit of further digging.
  • No exactly the opposite. HMRC accept a difference between actual ownership of an asset & beneficial ownership split any way you like. Follow the links previously posted.
  • Stuart_W said:
    Am I correct in thinking that where a savings account is in joint names, the Personal Savings Allowance is applied equally to both parties (50% to each) - or can you choose to "allocate" it to one or the other in respective tax returns, as long as it is all accounted for? I have read conflicting advice.

    Some of the savings my wife and I have are in joint names, some isn't, and the gradual increases in interest rates are pushing our annual interest income closer the the PSA limit for one person but not two so I want to make sure we're not caught out. 
    Where on earth have you read something suggesting that is possible 🤔.

    HMRC automatically give any relevant rate bands when calculating your tax liability.

    To be able to use the savings nil rate band (aka Personal Savings Allowance) you have to have used your Personal Allowance (£11,310 or £12,570) and any available savings starter rate band (upto £5,000 interest taxed at 0%).
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