A client has joint savings accounts with his wife. He is a higher rate tax payer; she is a basic rate tax payer. He wants to allocate all the savings income to his wife. However I have advised that if the accounts are straight forward accounts set up in joint names there is no option to allocate the savings income other than 50/50.
He believes this is unfair.
Unless I am missing something my understanding is that he would need to set the savings up in his wife's sole name to achieve this income split. Is that correct?
There is nothing he can do retrospectively re 18/19
Many thanks
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HMRC says he should call 0300 200 3300 (the savings helpline) if he believes it should not be 50:50.
Have a look at Savings and Investment manual SAIM2420. It does mention joint account and electing to their entitlements if its not a 50:50 split. It would depend on the amount of tax at stake and also legally I'm not sure how it would stand in say a divorce case if there was a joint account but they say its 100% her money. I doubt whether they can get their time machine out and go back to make things fit to what they want.
"He believes this is unfair"
Literally nothing unfair about it. It is 50/50; basically the definition of fair.
Surely this is what HMRC's Form 17 is for. Evidence of the non equal ownership will though have to be provided with the form, i.e. a copy of a declaration of trust or other evidence to show the source of the unequal funds i.e. receipt of a gift / inheritance
Another way for the wife to be taxed on all of the income would be for the husband to die. Joint bank accounts are owned as joint tenants, and everything in the account will pass automatically to the wife on the husband's death.
That's why form 17 won't work, unless you use one of those cumbersome deed of trust thingies to effectively give all of the money to the wife.
Or, the husband could just give all of the money to the wife.
Or, the husband could just give all of the money to the wife.
Apparently, it's already hers (else what was this thread about?)
Well, if it's already hers, it does seem unfair that the husband should be being taxed on any of it.
And, conversely, if the tax treatment is unfair that can only be because the money is already hers...
…but the solution in that case would not be Form 17, it would be to note that the s626 exception from the settlements legislation does not apply.
"In a taxing statute one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax"
Justice Rowlatt
in
Cape Brady Syndicate v. IRC (1921) 1 KB 64