Joint Accounts and Tax Declarations

[City_Tiger]

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Just wondered if anyone can clarify the tax situation for joint accounts. I have found details related to interest earned on joint accounts but nothing for my particular circumstance.

Basically myself and my girlfriend have a joint account in to which we both pay a fixed amount every month. This is the only money going in to that account and out of it comes things like mortgage payments, utility bills, weekly food shopping, etc etc.

So the question is, as the account is in both of our names, do I have to declare the money she pays in to the joint account as income? If so it basically means we would be paying double tax on the money she pays in (first she pays tax via PAYE and then I would pay tax on self assessment).

The mortgage is only in my name so I can see I perhaps have a tax liability there as technically what she pays for the mortgage is rental income (I guess?) but how about the other stuff?

If I do have to declare everything she pays in to the joint account as income then I cannot see how it makes sense to have a joint account?

Any help or guidance appreciated.

Paul.

[Barry]

If its a standard joint account then the interest will be taxed before it arrives in your account normally.

There will be no need to declare that account to the taxman.

Barry

[Barry]

Your also allowed a lodger without incurring any tax liability from the income - dunno how much it is though.

Baz

[City_Tiger]

Thanks Barry.

I understand about the interest, thats fine as like you say the interest is already tax deducted when it reaches the account.

I am more concerned about if my partner is paying in say £500 a month and part of that is being used to pay mortgage, bills, etc......then do I have to declare and pay tax on that £500 a month as income.

Hopefully someone can clarify that and also has some information on this lodger income relief you mention.

[Barry]

The joint account should only have money going in to it that you have already paid tax on (or going to in the future under self assessment first year)

If thats the case then its nothing to do with the taxman how you spend this money, what on, or how much share - the tax is already paid on it and it yours to spend as you please.

- if your paying any business or cheques into the joint account from work - then open up another account to operate this from.

There is no need to declare your joint account specifics to the taxman if tax on the interest is at source.

(this is all as far as I know and may not be fact ask a accountant)

Baz

[City_Tiger]

Thanks Barry,

The money that goes in to the joint account is all money that tax has already been paid on. However, half of that money is not money I paid tax on but money my partner paid tax on.

That is where I think it gets a bit cloudy as technically it is a form of income to me which I personally have not paid tax on. However as my partners name is also on the account does that make it non-taxable.

I guess I need to get a qualified accountant to confirm that for me.

[Mogga]

Both names on the account? Then it's both your money - not just yours.

[darrenb]

This may help clarify the position: Is the money I give to my partner taxable? | This is Money.

On the assumption that your relationship is the reason for living together and you are not attempting to profit from the money paid in by your partner (you say you both pay towards bills etc.), then the amounts are not taxable.

The only thing that would be disclosed is 50% of any interest earned on the account (or whatever the split of income paid in is).

[City_Tiger]

Thanks - that article could have been written for me it is so relevant to my circumstances!

That makes sense and is a relief providing it is correct!

[hrbs]

So the question is, as the account is in both of our names, do I have to declare the money she pays in to the joint account as income?
Paul.

Hi Paul

You don't declare the amounts she pays into your account, but you will need to include your share of the interest received in your tax return. The tax deducted by the bank will be treated by HMRC as a payment on account for your tax bill. If you are a higher rate tax payer there will be additional tax due on the interest over the amount deducted, as the bank deducts tax at the basic rate.

Regards

Keith

[City_Tiger]

Perfect - Thanks Keith and everyone else who has helped