Can I avoid higher tax band for last year?

YBR

I'm just getting everything together for the tax year ending 2026, I notice that my salary income and fees I received come very close to the 40% tax band. I wonder if I can slip into the basic rate tax band my queries are:

Does savings interest form part of the "Income after allowances" on which tax bands are based? Including it might take me over the threshold.

I have a joint savings account with my mother, the money being all hers but giving me access to funds should I need to act for her in an emergency or for death-related expenses pre-probate. How do we confirm to HMRC that the interest is hers entirely? This might keep my savings interest under the higher rate savings allowance.

I still pay professional institution/registration fees for my previous role, am I correct that they're no longer valid for tax relief if not necessary for my current role?

Thanks for your thoughts

El_Torro

As i understand it interest on a joint account is split 50 / 50, you can't let your mother be liable for all of it.

Yes, interest can push you into a higher tax band.

One way to stay in a lower tax band is via charity donations. I believe you can donate this year to help you out with last year's tax. This is different to pension contributions where any contributions only help you out in the year they are made.

Grumpy_chap

https://forums.moneysavingexpert.com/discussion/6669778/can-i-avoid-higher-tax-band-for-last-year

AIUI, the only thing you can do after the tax year end, but before first submission of the SA return, to reduce your ANI is Gift Aid charity donations for which there is a process that allows the donation made this tax year to be treated as though it was made last tax year. I am not familiar with the process.

Everything else has to have been done within the tax year and all you can do now is to be sure to record correctly.

Money in the joint account with your Mother will be treated as 50 / 50 for ownership and for interest generated. There are several reasons why the joint account is not a good solution:

- You will be treated as having the asset value (half anyway) should you ever need to claim means tested benefits.

- If your Mother dies before you, you automatically become the owner of the value of the account (and vice-versa). This can complicate Estate valuations and may not align with the Will assuming there would be beneficiaries other than yourself.

DRS1

Does it really matter? How much savings interest is there (including your 50% of the joint account interest)? Let's say it drives you into the higher rate tax band then the PSA is down to £500 but if the interest is under £500 then it will all be taxed at 0% not 40%.

There is an election which can be made by spouses or civil partners that the interest on a joint account is split other than 50/50. But that is only for spouses or civil partners. There is this paragraph in an HMRC manual which may assist but I am not sure if it is out of date or how you could show HMRC that the last sentence applies

"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."

YBR

https://forums.moneysavingexpert.com/discussion/comment/82011611#Comment_82011611

That's very helpful, thanks.

Does it really matter, only a little. I'll pay it if the money is due but having a separate savings allowance I wasn't sure whether it was also income. [My circumstances are somewhat more complex for the tax year just ended so having to learn].

The quote makes it a little clearer, but it hinges on "sufficient evidence", a typically unhelpful phrase from HMRC. I'll discuss with mum…

Keep_pedalling

Your mother really should put a lasting power of attorney in place you can then get rid of the joint account. It is not going to be much use to you if for instance you mother lost mental capacity through illness or accident and you then had to manage her finances long term.

As for probate banks will release quite large sums without probate as long as the amount they hold is below the probate limit they have set, so there is no need to have a joint account for that.

YBR

https://forums.moneysavingexpert.com/discussion/comment/82011745#Comment_82011745

We have LPoA, which is no use after her death. Her choice to do it this way, and it's based on assumption that DH and I are as cash-strapped as she was at that stage (not entirely true).