Does a Pensioner have to pay tax on interest earned?

TJTJTJTJ9

Dear Forum members,

Please note that I am a retired pensioner & have a joint account with my grandson.

The total amount belongs to me & not my grandson.

My grandson is a Tax payer, is holding this account joint (One Year Fixed Term Bond) to take benefit of Financial Services Compensation Scheme (FSCS).

As a pensioner I am 100% Beneficial owner of these funds and will / may pay taxes on all interest earned on theses funds. 

Please advise if I or my grandson have to pay tax on interest earned?

In-addition I have checked the following HMRC websites:

1).  gov.uk/app-tax-free-interest-on-savings

      Tax on Savings Interest.

2). gov.uk/check-if-you-need-tax-return

      Check if you need to send a Self Assessment tax return.

Having completed HMRC website questionnaire for (2) & the answer was I do not need to send a Self Assessment return for 2023 - 2024.

You do not need to inform HMRC that you will not be sending a return - unless they asked me to send one.

Please advise & confirm on tax issue for the interest earned.

Kind Regards,

TJ

jimjames

Normally joint accounts are deemed to be owned 50/50 so you'd each need to pay tax on half of the interest. But depending on their income they may get £500 or £1000 tax free interest

eskbanker

TJTJTJTJ9 said:

As a pensioner I am 100% Beneficial owner of these funds and will / may pay taxes on all interest earned on theses funds. 

Just to be clear, being a pensioner doesn't in itself make any difference to ownership of the money!  However, if you wish to take sole ownership of the interest income then you can notify HMRC accordingly:

https://community.hmrc.gov.uk/customerforums/pt/ffdd88ba-1132-ee11-a81c-6045bd0ca72b

Rollinghome

Hello TJ,

If the account is in your name, then you'll be liable for any tax, should any be due, on the interest. If it is in joint names, then you'll be liable for half each.

Whether you will need to pay any tax depends on your total income including pensions, interest and any other source. That total could be as high as £18,570 without there being any tax to pay.  Details here   https://www.aviva.co.uk/investments/savings-accounts/knowledge-centre/personal-savings-allowance/ and on the HMRC website.

xylophone

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

Where a savings account or other source of interest is owned jointly by persons who are not spouses or civil partners, they will be taxed on the interest to which they are actually entitled. In most cases, the practical result is that interest will be split equally between the account-holders. This is because the funds held in bank, building society or similar accounts in joint names are usually intended by the account holders to be held in joint ownership; irrespective of how much each has contributed. This means that each account holder is entitled jointly to all of the funds in the account, and interest is paid to the account holders jointly. Where there is no, or insufficient evidence, to show that the account holders intended the funds in the account to be held in joint ownership or in specified shares, the parties will be taxed according to the share of funds that each has respectively contributed.

The OP should contact HMRC.