Joint accounts and tax
Discussion
I'm a higher rate tax payer and self assess, while my wife's currently paying basic rate via PAYE only. If we open a joint account do I declare half the interest on my self assessment or how does it work?
The account would mainly be for me to put money in and her to spend if/when we have kids, so it wouldn't be me benefiting from the interest in which case presumably her having a personal account and a shared credit card might be a better idea?
The account would mainly be for me to put money in and her to spend if/when we have kids, so it wouldn't be me benefiting from the interest in which case presumably her having a personal account and a shared credit card might be a better idea?
Simple answer is "yes".
As it is a joint account, any interest received on the account is split between you and the other account holder.
If the other account holder is a basic rate taxpayer - then they have no more tax to pay as the 20% tax deducted at source by the bank will clear her tax liability on that interest.
As you are a higher rate taxpayer, you will be required to show 50% of the interest on your self assessment tax return. You are liable to pay 40% tax on this interest. You will receive a credit for the 20% already deducted at source by the bank and the remaining 20% due will be part of your overall self assessment tax bill for the year.
As it is a joint account, any interest received on the account is split between you and the other account holder.
If the other account holder is a basic rate taxpayer - then they have no more tax to pay as the 20% tax deducted at source by the bank will clear her tax liability on that interest.
As you are a higher rate taxpayer, you will be required to show 50% of the interest on your self assessment tax return. You are liable to pay 40% tax on this interest. You will receive a credit for the 20% already deducted at source by the bank and the remaining 20% due will be part of your overall self assessment tax bill for the year.
A simple confirmation that Eric is right, as always! My wife and I have a joint account and we've been doing self assessment for 20+ years. The interest is split 50/50 and she gets a tax rebate as her overall income is below her personal allowance, and I pay 40% as mine is considerably more.
R.
R.
The Leaper said:
A simple confirmation that Eric is right, as always! My wife and I have a joint account and we've been doing self assessment for 20+ years. The interest is split 50/50 and she gets a tax rebate as her overall income is below her personal allowance, and I pay 40% as mine is considerably more.
R.
Why doesn't she register to receive her interest gross? This can be done on a joint account with the effect that the tax deduction is halved but is wholly attributable to your half of the income.R.
David
sumo69 said:
The Leaper said:
A simple confirmation that Eric is right, as always! My wife and I have a joint account and we've been doing self assessment for 20+ years. The interest is split 50/50 and she gets a tax rebate as her overall income is below her personal allowance, and I pay 40% as mine is considerably more.
R.
Why doesn't she register to receive her interest gross? This can be done on a joint account with the effect that the tax deduction is halved but is wholly attributable to your half of the income.R.
David
Lady B pays a lower rate of tax than me, that's why pretty much everything is in her name.
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