Joint income from savings
If you have joint savings (or shares), make sure you understand how the income is split between you for tax purposes.
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Joint accounts with a spouse or civil partner
Members of a married couple or a civil partnership are taxed separately. This means each spouse or partner is potentially entitled to a personal allowance, the starting rate for savings, a personal savings allowance, dividend allowance, etc.
If you have savings (or shares) held in joint names between you and your spouse or civil partner, by default, 50% of the interest (or dividend income) arising is treated as taxable on you and the other 50% is taxable on your spouse or civil partner. This is the case even if the underlying beneficial entitlement is unequal (for example, if only one spouse or civil partner funds the savings account or purchases the shares).
However, you may both elect, on form 17, to be taxed in accordance with your respective beneficial interests instead, if these are unequal. The election is irrevocable and may only be backdated 60 days.
Other joint accounts
By contrast, note that joint owners of property (such as a joint bank account or jointly-held shares) who are not married or in a civil partnership, are taxed on the share to which they are entitled. In most cases this will be 50:50, even if contributions to the account are unequal.
Transferring investments to your partner
To take best advantage of being taxed separately, it may be sensible, for tax purposes, to transfer savings (or shares) to your partner. This can save tax on the interest or dividends if you are part of a couple where one person has spare capacity in their allowances or is in a lower tax band than the other.
You will need to bear in mind, however, that transferring legal ownership of property to your spouse or civil partner might have other impacts – for example, the revised ownership might be taken into account on a separation or divorce. If you are concerned about these other impacts, you should take legal advice.
Also, if you transfer shares to your partner, this is a disposal for capital gains tax purposes. If you are not married or in a civil partnership when the shares are transferred, there may be capital gains tax to pay on the transfer.
However, there will be no capital gains tax to pay if you are transferring (that is, gifting) a cash balance in pounds sterling, whether or not you are married or in a civil partnership.
There could also be inheritance tax implications.