Special rules for joint savings accounts
Taxation of savings
If you are a married couple or civil partners, and you have a joint savings account, you might think about giving all the interest to whichever of you pays the lower rate of tax. But there are special tax rules which stop you doing this.
The income tax rules will treat the income as if had been earned equally between you, even if you and your spouse or civil partner did not contribute capital equally to the joint account.
Example: Mr and Mrs B receive bank interest of £1,000 on a jointly held savings account. Mr B’s income is less that his tax free allowance, but Mrs B is a basic rate taxpayer. If all the bank interest were treated as Mr B’s, then the couple would pay less tax. But the special rules for joint accounts say that the interest must be split 50:50 – £500 each in this case.
TaxAid Tip
One reason for this treatment is that couples investing in a joint account are normally treated as ‘joint beneficial owners’. If your investment is not on this basis – and there is evidence, for example by a deed, of a different split, HMRC might accept a different split of interest. See http://www.hmrc.gov.uk/manuals/Inmanual/IN154.htm
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