Interest on a joint account paid a few days after death.

jem16

My parents had a joint savings account with interest paid annually at the end of March. My Mum passed away a few days before the interest was credited. Does this all fall on my Dad to pay any tax due on it?

Keep_pedalling

I am pretty sure that for a joint account the surviving account holder is responsible for any income tax on interest payments paid after the the death of the other account holder.

jem16

Keep_pedalling said:

I am pretty sure that for a joint account the surviving account holder is responsible for any income tax on interest payments paid after the the death of the other account holder.

I think you're correct. I've now been pointed in the direction of this which confirms it.

https://www.litrg.org.uk/tax-nic/trusts-and-estates/bereavement-tax-issues-death/joint-property-death?fbclid=IwY2xjawGOCENleHRuA2FlbQIxMAABHfsTitnwY10uYiL5IMLuy-g-VaxrTnV2d25x_NJai-ot4ODm6Si3vSH6Fg_aem_m3EsoaQV9r3P4NFnPhnsSw#:~:text=Joint bank accounts,-We discuss how&text=When one of the account,be income of the estate

buddy9

The comment in the link:

When one of the account holders dies, the funds in that account will usually automatically belong to other joint account holder(s). 

is not accurate for Scotland.

jem16

buddy9 said:

The comment in the link:

When one of the account holders dies, the funds in that account will usually automatically belong to other joint account holder(s). 

is not accurate for Scotland.

Can you elaborate please as all the joint accounts just became Dad’s.

buddy9

https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm15054

buddy9

https://www.murraybeith.co.uk/new/executry/what-happens-to-a-joint-bank-account-when-one-party-dies.html

jem16

buddy9 said:

https://www.murraybeith.co.uk/new/executry/what-happens-to-a-joint-bank-account-when-one-party-dies.html

Thank you. Mum left everything to Dad and joint accounts were treated appropriately for IHT but no IHT due anyway. The account I’m referring to was with NS&I which I’m assuming does not fall under Scottish law anyway. Interesting though about the different treatment if one joint account holder could prove all funds were his/hers. 

Main question though was the interest payment made after death.

Keep_pedalling

jem16 said:

buddy9 said:

The comment in the link:

When one of the account holders dies, the funds in that account will usually automatically belong to other joint account holder(s). 

is not accurate for Scotland.

Can you elaborate please as all the joint accounts just became Dad’s.

I am sure buddy will be back to elaborate, but from my basic bit of Googling Scottish law does not automatically allow the surviving account holder to claim the entire account. The law applies to the institution rather than the holders so a couple living in England would still be subject to this if they had a joint account in a Scottish bank and presumably it would not apply to a Scottish couple with joint accounts in an English Bank.

https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm15054

If this applies I would imagine the same applies to income tax so part of the interest would belong to the estate rather than the surviving spouse.

jem16

Keep_pedalling said:

jem16 said:

buddy9 said:

The comment in the link:

When one of the account holders dies, the funds in that account will usually automatically belong to other joint account holder(s). 

is not accurate for Scotland.

Can you elaborate please as all the joint accounts just became Dad’s.

I am sure buddy will be back to elaborate, but from my basic bit of Googling Scottish law does not automatically allow the surviving account holder to claim the entire account. The law applies to the institution rather than the holders so a couple living in England would still be subject to this if they had a joint account in a Scottish bank and presumably it would not apply to a Scottish couple with joint accounts in an English Bank.

https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm15054

If this applies I would imagine the same applies to income tax so part of the interest would belong to the estate rather than the surviving spouse.

The only joint account coming under Scottish law was with RBS and was dealt with correctly on both IHT and Confirmation. Interest on that account was minimal anyway. RBS simply removed my mother’s name from the account and it became Dad’s but they had seen the Will which left everything to Dad anyway.

The main account I’m interested in was the NS&I account which was dealt with as estate falling within England. As it was their main account the interest payment was quite large. I am assuming that as the interest was paid 9 days after Mum’s death that it will fall as taxable to my Dad. Is this correct?

buddy9

My understanding.

For the purposes of Confirmation, NSI products can be shown as either estate in Scotland or estate in England and Wales.

While the Confirmation document asks for the inventory to declare the location of assets, this does not necessarily mean that different laws apply.

In terms of Scots Law, the succession of moveable estate in the UK (immoveable estate is different) is determined by the law of the domicile of the deceased (Lex domicilii) rather than the law of the location (Lex situs).

If there is a presumption of equality of equal shares in the account, presumably mother’s estate included half the value of the account at date of death, including half the interest accrued at that point.