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Date: 30th September 1990
Service: ORACLE
Region: N/A
Original Broadcast Channel: Channel 4
Current Page: 634
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P634 ORACLE 634 Sun30 Sep C4 2354:12 1/7 Joint accounts and sjparate taxation by Alexandra Cadell Were you one of those so flummoxed by the independent taxation that you sat by and did nothing? Or did you rush around opening new accounts and drawing up expensive documents to prove that your assets were well and truly separated? As it turns out, life is going to be much simpler for couples than was originally thought. A wife will be able to claim the tax back on her capital in a joint account. more >Your Money guide 630 Tax Rates 635AA HELPLINE FOR NEW CAR BUYERS p190 Your Tax Letters Trusts/Pensions City
P634 ORACLE 634 Sun30 Sep C4 2354:33 2/7 Joint accounts and separate taxation Independent taxation revolves around one very simple idea. Married women have the same right to a personal tax allowance as anyone else. This means that in this tax year, they can "earn" £3,005 before they pay tax. So if there was a stash of money that the husband was paying tax on, the obvious thing to do was make it over to the wife so that she could receive interest on it - tax free. It was this thinking which led to a flight of money offshore. more >Your Money guide 630 Mortgages 632Your Tax Letters Trusts/Pensions City
P634 ORACLE 634 Sun30 Sep C4 2351:17 3/7 Joint accounts and separate taxation Women trying to make the best use of their personal allowance, didn't have many options to start with. National Savings have certain gross- paying accounts; there were banks and building societies offshore; time deposits...and that was about it. If shares were made over to the wife, she could then claim the tax back on the dividends. But what about property held in joint names? How should that be apportioned? more follows >Your Money guide 630 Tax Rates 635Your Tax Letters Trusts/Pensions City
P634 ORACLE 634 Sun30 Sep C4 2355:32 4/7 Joint accounts and separate taxation The Inland Revenue hands out Form 17 to couples who want to declare they hold unequal shares in an asset, and want any income it generates to be taxed according to those unequal shares. So if, for example, the wife owns two- thirds of a flat, she can receive two- thirds of the rental income. As a non-taxpayer, she would not have to pay tax on the first £3,005 of it. But a glance at form 17 shows that the commonest types of jointly-held assets - deposits in banks or building societies - are excluded. more >Your Money guide 630 Mortgages 632Your Tax Letters Trusts/Pensions City
P634 ORACLE 634 Sun30 Sep C4 2352:23 5/7 Joint accounts and separate taxation The reason that joint accounts are not included in Form 17 is that, under property law, you are deemed to hold them equally, ie, 50-50. You unwittingly agree to this when you sign the first application document. As a result, it became all the rage to hold your bank and building society accounts as "tenants in common". This does allow you to hold the assets unequally - although it can cause problems when one account holder dies. His/her share will not automatically pass to the survivor. more >Your Money guide 630 Mortgages 632Your Tax Letters Trusts/Pensions City
P634 ORACLE 634 Sun30 Sep C4 2352:46 6/7 Joint accounts and separate taxation At the moment, only higher-rate taxpayers would benefit from having accounts as tenants in common. There is no tax advantage for everyone else. But there will be some reason to have these accounts when composite rate tax is abolished next April. Then, non-earning wives will be able to claim the tax back. But can they claim a tax rebate on accounts shared with their husbands. And, if so, should those accounts be held as tenants in common? No is the answer. more >Your Money guide 630 Mortgages 632Your Tax Letters Trusts/Pensions City
P634 ORACLE 634 Sun30 Sep C4 2357:27 7/7 Joint accounts and separate taxation The Inland Revenue says you CAN hold joint accounts in unequal shares. So, if the wife owns 90% of the capital she can receive 90% of the interest - tax free. She can even plough the interest back into the account and share it with her husband - it's up to her how she spends the money. One word of caution. If the wife owns the capital she well and truly owns it. And should the taxman ever ask, it would be wise if she has a note to that effect. It can be very simple. Just a statement saying who owns what, signed by both partners. start >More money talk on Wednesday Your Tax Letters Trusts/Pensions City