Tax on joint savings account

Paul_Croft

I am s pensioner and my wife does not work ir get an income as she is under pension age. We have a joint savings account and although I know I am allowed £1000 interest free what is my wife entitled to interest tax free and is that added to mine. IE. It my wife got £1000 interest tax free would it be a total of £2000 interest tax free. I know my wife filled a form in many years ago to say she was exempt from paying tax in savings but that may have changed since. Can anyone advise please as I do not want to go over the threshold and be taxed 20% on any interest about the allowance. Thank you.

xylophone

See

https://www.gov.uk/hmrc-internal-manuals/savings-and-investment-manual/saim2420

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).

I know my wife filled a form in many years ago to say she was exempt from paying tax in savings but that may have changed since. 

This was in the days when interest was deducted by the savings provider before being paid to the account holder. Nowadays savings

 interest is paid  without tax deducted.


With regard to the current position on tax on savings interest see

https://www.gov.uk/apply-tax-free-interest-on-savings

and for more detail (with examples) here

https://www.litrg.org.uk/tax-guides/savers-property-owners-and-other-tax-issues/savings-and-tax




You will notice that depending on circumstances, it is possible  to earn more than £1000 in savings interest and not be liable for tax.

Reed_Richards

For tax purposes, a joint account is treated as if each holder had their own account holding half the total money.

Bigwheels1111

Get the savings in your wifes name, issue solved.

If your wife does not get any money, benefits etc.

She can earn £18,570 of interest a year tax free, over 10k a self assessment would need to be filed.

Cosmic_Life

Paul_Croft said:

..... We have a joint savings account and although I know I am allowed £1000 interest free what is my wife entitled to interest tax free and is that added to mine. IE. It my wife got £1000 interest tax free would it be a total of £2000 interest tax free. ....

You are correct, it would be £2000 interest tax free made up of £1000 for her and £1000 for you and it is treated separately.  But depending on other income, you could earn more interest than that tax free, as Bighwheels1111 says above - your tax free income could be as much as £18,570 each

ColdIron

Cosmic_Life said:

Paul_Croft said:

..... We have a joint savings account and although I know I am allowed £1000 interest free what is my wife entitled to interest tax free and is that added to mine. IE. It my wife got £1000 interest tax free would it be a total of £2000 interest tax free. ....

You are correct, it would be £2000 interest tax free made up of £1000 for her and £1000 for you and it is treated separately.  But depending on other income, you your wife could earn more interest than that tax free, as Bighwheels1111 says above - your your wife's tax free income could be as much as £18,570 each

Corrections inline. It is the wife with no income that has a potential £18,570 available, We have no idea of the OPs income