Who pays tax on this matured fixed rate bond?

redulike

My wife's fixed rate (non-ISA) bond matured recently.  At the end of that fixed rate period she opted to transfer the whole value (original investment plus all the interest) into our normal joint bank account. 

My question is this .. who is liable for any tax payable on that interest earned by the fixed rate bond?

Is it 

a) my Wife - in whose name the bond was invested?

or is it

b) both of us - because that's where the interest ended up on closure of the bond and right now we are both 'beneficiaries' of it?

Is suspect the answer is a) and that any interest earns going forward is a separate matter entirely (and dependant on what we do with it now).

I know all about tax due on savings so I'm not looking for answers on that aspect here.  I'm just after advice on whether that interest gets added to her untaxed savings income or is shared between both our individual untaxed savings income totals.

Olinda99

if the savings were in joints names then it would be 50% to each but since it was in your wife's name then your wife is liable for 100%

aroominyork

My hunch is that since it is now in a joint account she is deemed to have donated half to you, so you each pick up half the tax bill.

artyboy

aroominyork said:

My hunch is that since it is now in a joint account she is deemed to have donated half to you, so you each pick up half the tax bill.

Eh what?? The account was in the wife's name when the interest was paid, and that is where the tax liability sits. If that money is then transferred into a joint account, that makes no difference. 

How would you feel if some random person made a payment into your account and then told you that you owed HMRC a tax payment off the back of it?

aroominyork

artyboy said:

aroominyork said:

My hunch is that since it is now in a joint account she is deemed to have donated half to you, so you each pick up half the tax bill.

Eh what?? The account was in the wife's name when the interest was paid, and that is where the tax liability sits. If that money is then transferred into a joint account, that makes no difference. 

How would you feel if some random person made a payment into your account and then told you that you owed HMRC a tax payment off the back of it?

Ah yes, I misread it. I though it was about tax going forward. I really should post stuff before coffee - apols.

poppystar

Since it is the institution where the fixed bond was held who would report the interest to HMRC it will be reported as your wife’s. Going forward any new interest will be split between you as it’s a joint account. 

redulike

Thanks all for your replies.

yes I'd forgotten to realise that the Institution where the fixed bond was held would communicate with HMRC. That Institution has no way of identifying me really to be able to make a split.