Savings tax allowances applied to joint savings accounts

db3745

My wife and I pool everything, and with her pension income leaving her the full £6000 savings allowance until  recently, I'd tended to put most of our savings, barring ISAs in her name. As we age I know it would make life simpler when one of us dies if we maximised what we could put in joint names. Is the rule on joint accounts really as simple as tax is due at 50% each, so that once I'd used up my £1000, any surplus would be taxable, rather than us being able to use the extra allowance she still has - I estimate some £4000 next tax year - to soak up the tax and pay it all herself till she reaches the say £4k limit, and we each pay tax. I fear I know the answer, but I'd like to be sure.

Different issue, but still tax on savings. Like most other people we haven't had to worry about savings tax until recently, but this tax year about to end will see my wife £200-£300 max in interest over her allowance. Obviously well short of the £10,000 of self-assessment, will HMRC pick this up from the various institutions, and add it to pay next year? It's many years since I used to do self-assessment - on paper - and I don't want to have to start doing it again if HMRC are going to pick it up themselves. I only say this because my wife has no interest (no pun intended) in finance and online finance in particular.

Thanks all.

eskbanker

Savings interest from joint accounts is allocated on a 50/50 basis, so if you want to take advantage of asymmetric allowances then you'd need to retain one or more sole accounts alongside any joint ones.

And yes to the second question, the institutions report interest to HMRC, who'll adjust the coding for the next year but one (i.e. outstanding tax from 23/24 would be collected via PAYE in 25/26).

xylophone

See

https://www.litrg.org.uk/savings-property/tax-savings-and-investments/joint-income-savings#:~:text=Joint accounts with a spouse or civil partner,-Members of a&text=If you have savings (or,your spouse or civil partner.

Members of a married couple or a civil partnership are taxed separately. This means each spouse or partner is potentially entitled to a personal allowance, the starting rate for savings, a personal savings allowance, dividend allowance, etc.

If you have savings (or shares) held in joint names between you and your spouse or civil partner, by default, 50% of the interest (or dividend income) arising is treated as taxable on you and the other 50% is taxable on your spouse or civil partner. This is the case even if the underlying beneficial entitlement is unequal (for example, if only one spouse or civil partner funds the savings account or purchases the shares).

However, you may both elect, on form 17, to be taxed in accordance with your respective beneficial interests instead, if these are unequal. The election is irrevocable and may only be backdated 60 days.

ScottMacfarlane

I have 2 joint accounts with my mum, purely so that I can access in an emergency. Can i get the interest tax part allocated solely to her as the money isn't mine

Albermarle

ScottMacfarlane said:

I have 2 joint accounts with my mum, purely so that I can access in an emergency. Can i get the interest tax part allocated solely to her as the money isn't mine

This was already answered in one of the above posts.
Savings interest from joint accounts is allocated on a 50/50 basis.

eskbanker

Albermarle said:

ScottMacfarlane said:

I have 2 joint accounts with my mum, purely so that I can access in an emergency. Can i get the interest tax part allocated solely to her as the money isn't mine

This was already answered in one of the above posts.
Savings interest from joint accounts is allocated on a 50/50 basis.

But my comment was superseded by another detailing how taxation can be aligned to unequal beneficial interests.

sheramber

eskbanker said:

Albermarle said:

ScottMacfarlane said:

I have 2 joint accounts with my mum, purely so that I can access in an emergency. Can i get the interest tax part allocated solely to her as the money isn't mine

This was already answered in one of the above posts.
Savings interest from joint accounts is allocated on a 50/50 basis.

But my comment was superseded by another detailing how taxation can be aligned to unequal beneficial interests.

That post referred to married  or civil partnership partners,  not another and son joint account.

eskbanker

sheramber said:

eskbanker said:

Albermarle said:

ScottMacfarlane said:

I have 2 joint accounts with my mum, purely so that I can access in an emergency. Can i get the interest tax part allocated solely to her as the money isn't mine

This was already answered in one of the above posts.
Savings interest from joint accounts is allocated on a 50/50 basis.

But my comment was superseded by another detailing how taxation can be aligned to unequal beneficial interests.

That post referred to married  or civil partnership partners,  not another and son joint account.

Ah yes, good point - this is the problem with old threads being resuscitated by posters with different circumstances!

Sarahspangles

ScottMacfarlane said:

I have 2 joint accounts with my mum, purely so that I can access in an emergency. Can i get the interest tax part allocated solely to her as the money isn't mine

https://community.hmrc.gov.uk/customerforums/pt/da0c98c4-9b90-ef11-9443-6045bd0d1542

There’s an answer relevant to non-spouse joint accounts here. We looked into this in a mother/son arrangement which sounds similar to yours, and I found a better reference at the time but can’t see it now. Basically it was a letter to HMRC.