What are the tax implications of a joint account in the UK?

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What is a joint bank account?

A joint bank account is a bank account that you share between one or more people. Many people have joint accounts with a spouse, partner, housemate or relative. It makes paying  things like bills much easier. 

If you’re looking to bring your money together and make life easier to manage, you could get a joint account with Monzo. 

You’ll both need a regular Monzo account already and after that it just takes a few minutes to set up a joint account.

You can learn more about Monzo and joint accounts here.

How does a joint account work with income tax? 

Personal Savings Allowance, introduced in April 2016, means that annual interest from bank accounts and savings accounts are tax-free up to £500 for higher-rate taxpayers. And £1,000 for basic-rate taxpayers.

When it comes to interest and joint accounts, usually it will be split between both account holders, equally, and go towards each account holder's Personal Savings Allowances. 

If the joint account holders are in different tax brackets, income tax works a little differently to usual. 

HMRC has said that half of the interest earned will be given to each account holder, and then set against individual Personal Savings Allowance. And so if you're in different tax brackets, the interest is still split evenly. 

What are the tax implications of a joint account when someone dies?

When a joint account holder dies, money in the joint account will pass to the remaining account holder. This can be done once a death certificate has been received by the bank or building society. 

But when it comes to the tax implications, it works slightly differently.

If the joint account is held by a civil partner or spouse, the money will be exempt from inheritance tax. 

If the joint account isn't held by a civil partner or spouse (unmarried partners, friends, housemates or relatives), HMRC will need to know how much money was deposited and withdrawn by each account holder.  Any inheritance tax that is owed to HMRC will be paid by whoever put the money into the account. If you never added any money to the joint account, the money will be treated as part of the person who has died's estate.

Find out more about what happens to a joint account when someone dies.


Are you looking to open a joint account? Read more about how a joint account works with Monzo.