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Tax on interest on joint accounts - 1 non-tax payer

My wife and I have several joint savings accounts (bank/building society) on which hitherto we have declared the interest on our tax forms on a 50:50 basis (as we have both paid tax at the same rate). However, for one tax year only (2004-05) my own income will actually be below the tax threshold whereas my wife's will be in the 40% bracket. In future years I am likely to be paying tax at the standard rate only.

Obviously from 2004 onwards, it is in our interest for as much of the interest as possible to be declared by me, rather than my wife. Is it permitted for me to simply declare all of it on my tax return? The contents of the accounts concerned is basically 'ours' - would she need to officially 'gift' it all to me to be legit, and if so, how would that be done in a manner to satisfy the taxman?

We're certainly not talking huge sums here; nevertherless I'd rather keep what interest I can than let the taxman have it!

Thanks Dave

Reply to
Dave P
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Bitstring , from the wonderful person Dave P said

Just open an account in your name only, and transfer some of the cash** to that (assuming your wife is happy to go along with that .. trust in marriages seems to be an increasingly rare commodity these days). All the interest on that a/c defaults to yours, and yours only, for tax purposes. Obviously you need to make sure you have a will in place, so that this asset which is now yours alone goes to the right place if you suddenly die - but you should have done that anyway.

** not more than 35k pounds with any one institution (less if you have a joint a/c with the same institution at the same time)
Reply to
GSV Three Minds in a Can

Yup, that'd work... but what about the situation for 2004-05, which was actually my main concern in asking the question? Thanks

Dave

Reply to
Dave P

Bitstring , from the wonderful person Dave P said

Awkward - in theory you can assign the interest other than 50:50, however in practise the IR are likely to want it justified, and you'd have a hard time doing so. If you'd told the BS/Bank in advance that would probably have worked, but by now they've probably already issued a

50:50 split certificate of interest/tax deducted.

I've never tried doing it retroactively .. I'd always worked out in advance what is the best split. Over to anyone who has ....

Reply to
GSV Three Minds in a Can

Joint deposit accounts can be a bit of a problem. Most of them are set up as a "joint tenancy" rather than "tenants in common".

In which case the income is split 50:50, and no other split will be accepted by the IR, not will they accept a Form 17 election.

If you can sever the joint tenancy, then you can elect for a different split, but only from the date of the election. There is a 60 day time limit to submit the signed election to the IR.

As GSV has already said, separate accounts is the best option - but that will not work retroactively.

Reply to
Doug Ramage

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