
Wondering if a Joint Self Assessment Tax Return is possible in the UK? The answer might surprise you. Let’s break it down in this article!
Are Joint Tax Returns Allowed in the UK?
In the United Kingdom, individuals are required to file separate tax returns. Joint tax returns, as seen in some other countries, are not permitted.
Each person is responsible for reporting their own income and capital gains to HM Revenue and Customs (HMRC).
However, certain allowances and tax reliefs, such as the Marriage Allowance, may be available to couples, allowing one partner to transfer a portion of their personal allowance to the other under specific conditions.
Tax Rules for Joint Accounts
Keep in mind that the tax rules for joint bank accounts depend on the relationship between account holders and their contributions:
Spouses and Civil Partners: Interest is split 50:50 by default, but HMRC allows taxation based on actual shares if declared. This also answers the commonly asked question, “Who pays tax on joint account interest?”.
Other Joint Account Holders: Interest is taxed according to each person's entitlement, usually shared equally unless contributions differ.
Tax Responsibilities for Jointly Owned Rental Properties
In terms of joint ownership rental income tax, you should note that, by default, rental income is taxed equally (50:50), regardless of actual ownership shares.
To be taxed according to actual ownership proportions, couples must submit a Form 17 to HMRC, along with evidence of their respective beneficial interests.
How Much Interest Can You Earn on a Joint Account Before Paying Tax?
In the UK, joint account interest is split equally between account holders for tax purposes. Each person's tax liability depends on their Personal Savings Allowance (PSA):
Basic-rate taxpayers (20%): Up to £1,000 tax-free interest.
Higher-rate taxpayers (40%): Up to £500 tax-free interest.
Additional-rate taxpayers (45%): No PSA.
For example, if a joint account earns £2,000 in interest, each person is attributed £1,000. A basic-rate taxpayer wouldn’t pay tax, but a higher-rate taxpayer would owe tax on £500. PSAs apply individually, not to the account as a whole.
What We Think
We see the pros and cons of the UK’s system when it comes to tax returns. The lack of a Joint Self Assessment Tax Return means couples have to file separately, which ensures everyone’s finances stay clear and organised. But let’s be honest - it can feel unnecessarily complicated when you’re dealing with shared income, like interest from a joint account or rental properties.
We think there’s definitely room for improvement. A more straightforward process for handling joint income would save couples a lot of time and effort, not to mention reduce the chances of mistakes. On top of that, clearer guidance from HMRC about shared income and allowances would make life a whole lot easier.
However, we do appreciate the options available for couples, like the Marriage Allowance or Married Couple’s Allowance. These can really help lighten the tax load if you qualify, and they’re worth exploring.
How JAFA Can Help
JAFA uses AI technology to help you easily track and manage all your income sources, including joint accounts and rental properties. Instead of worrying about splitting figures or double-checking every detail, JAFA helps you organise everything in one place, ensuring accuracy and saving you valuable time.
In addition to this, you will get clear insights into tax-saving opportunities like the Marriage Allowance or Married Couple’s Allowance, so you can maximise your savings without the guesswork.
Furthermore, JAFA’s user-friendly system makes Self Assessment straightforward. Whether you’re filing as an individual or managing shared income with your partner, we will guide you every step of the way - reducing the risk of mistakes and making tax season stress-free.
Contact our expert accountants in Birmingham, UK, either by booking a FREE discovery call or calling us on +44 121 227 6277.
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