Tax on Joint Savings Accounts

M4rtyman · 11 January at 6:00PM

A few years back I moved home to help look after my disabled mother. She passed away in 2022, so now it is just me and my elderly father. We set up a joint current account with Starling and have all bills and such being paid from that account. Thought it was the sensible thing to do, in order to help manage the household finances if anything happened to either of us.

At the time, the Starling Current account paid an ok amount of interest, but that will soon be changing, as they are removing all interest from current accounts. You can still create a "saver space" within their current accounts that will earn interest, but that is only available to PERSONAL accounts, not JOINT. So that leaves me looking to find a separate joint savings account, where we can leave the bulk of our money and give us both the ability to top up the Starling account when required.

However ... it got me thinking. If we open a joint savings account, what happens to the tax on the interest payments? My dad has a pretty decent final salary pension, so the majority of the account will be funded by him. He is also in the 40% tax bracket. I am not.

Wll HMRC just split the tax liabilty on the on the interest at 50% each, even with the source of the funds being uneven, and us both in different tax brackets? And if so, is that handled automatically by HMRC?
If not, how do they work out who is due what?

Cheers

Flugelhorn · 11 January at 6:11PM

I think With our joint account they just assume it is 50:50 - and that is what we tell them it is anyway . Not sure what would happen if I told them it was all DH's and therefore only to be taxed at 20%.