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Joint bank account, not spouses, who pays the tax on the interest

Joint bank account

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Mother and daughter have a joint bank account. All the money is the mothers, the daughter is a joint holder for admin purposes only as mother is 92. On whose tax return does the interest appear ?

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By johngroganjga
20th Jun 2016 09:38

Mother's. But I would put a white space explanation on the daughter's return saying why none of it is included on hers.

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Replying to johngroganjga:
Time for change
By Time for change
20th Jun 2016 09:57

Whilst preferring not to take issue with John, I'm not entirely sure his response is entirely correct.
Surely, while both parties are alive, interest from the joint account would usually be taxed 50/50 unless they make a joint declaration to be taxed according to their beneficial interests?

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By Marion Hayes
20th Jun 2016 10:12

John is correct. Automatic 50/50 only relates to spouses for election purposes.
It is common practice for accounts to have a purely administrative signatory in circumstances like these and you should be able to show from the forms signed at the bank and the source/activity on the bank which will only relate to the Mothers income and liabilities

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Replying to Marion Hayes:
Time for change
By Time for change
20th Jun 2016 10:56

Obliged - always a long shot against John!

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By taxguru
20th Jun 2016 10:12

@OP
When you say joint account is all the money available at the daughter's disposal to do whatever she wants to do with it?

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By howarthco
20th Jun 2016 11:44

The beneficial ownership is mothers, proceeds of a LA policy. I'm of the opinion all the interest goes on mother's return.

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By JimFerd
20th Jun 2016 10:51

I thought with bank accounts, that each holder owns an equal share regardless of the source - and that you can't have an uneven split with a bank account, unlike the "tenants in common" situation with a house.

I could be talking nonsense though.

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By JimFerd
20th Jun 2016 11:07

To add to my last post - My reasoning behind this was that you can't split the ownership on a bank account for the same reasons you can't split the ownership on a property owned as joint tenants.

Like I said though, I'm not sure where I'm getting this from and it could be incorrectly lodged in my brain.

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Time for change
By Time for change
20th Jun 2016 17:44

NNR

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Replying to Time for change:
By johngroganjga
20th Jun 2016 11:30

But it's not joint property - it's all the mother's!

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Replying to Time for change:
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By howarthco
20th Jun 2016 11:42

I think that s282 rules here. Thanks to all

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By Portia Nina Levin
20th Jun 2016 12:16

Nearly 10 years after ITA 2007, I think we can safely forget what ICTA 1988 might have once said, other than in cases involving fraud.

So let us all read ITA 2007, section 836 together shall we:

This section applies if income arises from property held in the names of individuals who are married to, or are civil partners of, each other, and are living together..."

Now read the Bingham case: http://www.bailii.org/uk/cases/UKFTT/TC/2013/TC02528.html

Whilst the legal interest in joint bank accounts are held as joint tenants, the beneficial interest is assumed by default to remain the mother's (unless the daughter has an unfettered right to draw on it), since the capital all emanated from the mother.

If the capital is all the mother's then the interest arising from it is all the mother's.

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By JimFerd
20th Jun 2016 12:14

I might be wasting time on nothing here, as the account could only have a tenner in it, but...

What happens when the nursing home comes knocking for fees?

People tend to make these arrangements as to avoid timing issues when inheriting cash, and also to avoid care home fees.

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Replying to JimFerd:
By johngroganjga
20th Jun 2016 12:54

We are told that all the money in the account belongs to the mother.

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