Question
My husband and I hold bonds in joint names - can the interest received be declared, for tax purposes, in a ratio of say 30/70 which would be beneficial to us, rather than 50/50?Answer
I'm afraid not, income from jointly owned savings accounts and investments must be distributed in the same ratio as the ownership. This will be 50/50 unless you've altered the relative balance each of you owns.
If you have an easy savings account held in joint names it's fairly straightforward to close the account and open new ones individually in the proportion you wish. You just need to be aware of the Financial Services Compensation Scheme (FSCS) limit of £85,000 per person per institution. Hold £150,000 jointly and you're fully covered, but open two accounts holding £105,000 and £45,000 respectively (a 70/30 split) and one of the accounts will breach the compensation threshold.
You could purchase fixed interest savings bonds individually too, but less easy to adjust existing bonds where the money is tied up until maturity.
If your referring to an insurance company investment bond then withdrawals up to 5% (of your original investment) each year are not taxable (as they're deemed to be a return of capital) But you will may have to pay tax on total profits when you surrender the bond (via a calculation called top-slicing), which will take these withdrawals into account. While you can't alter the balance of a jointly held investment bond as such, it is possible to assign the bond to someone else (e.g. spouse) when surrendering to take advantage of them being in a lower tax band.
My husband and I hold bonds in joint names - can the interest received be declared, for tax purposes, in a ratio of say 30/70 which would be beneficial to us, rather than 50/50?Answer
I'm afraid not, income from jointly owned savings accounts and investments must be distributed in the same ratio as the ownership. This will be 50/50 unless you've altered the relative balance each of you owns.
If you have an easy savings account held in joint names it's fairly straightforward to close the account and open new ones individually in the proportion you wish. You just need to be aware of the Financial Services Compensation Scheme (FSCS) limit of £85,000 per person per institution. Hold £150,000 jointly and you're fully covered, but open two accounts holding £105,000 and £45,000 respectively (a 70/30 split) and one of the accounts will breach the compensation threshold.
You could purchase fixed interest savings bonds individually too, but less easy to adjust existing bonds where the money is tied up until maturity.
If your referring to an insurance company investment bond then withdrawals up to 5% (of your original investment) each year are not taxable (as they're deemed to be a return of capital) But you will may have to pay tax on total profits when you surrender the bond (via a calculation called top-slicing), which will take these withdrawals into account. While you can't alter the balance of a jointly held investment bond as such, it is possible to assign the bond to someone else (e.g. spouse) when surrendering to take advantage of them being in a lower tax band.
Read this Q and A at http://www.candidmoney.com/questions/question677.aspx
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