Allocation of savings interest agreement

If spouses or civil partners do not want a 50/50 split of savings interest, they can declare that income be split according to each person’s beneficial entitlement as detailed in a written agreement.

Beneficial ownership of bank account funds

As a general rule, assets owned by spouses in joint names are treated by HMRC as shared equally by both partners, and any income produced will be taxed accordingly. But where actual ownership of an asset differs from 50/50, a married couple or civil partnership can elect to be taxed on their actual share of any income it produces.

However, until 2011 HMRC would not accept an election for unequal ownership in respect of bank accounts. Its view was that any interest a joint account produced must be declared and taxed on a 50/50 basis because the money in joint accounts is equally accessible to both spouses.

In practice, where both spouses pay in and withdraw money from an account, it can be virtually impossible to say how much of the balance belongs to each. This means it’s also impossible to say how much interest each is entitled to. This problem can be overcome by spouses agreeing how much money in an account belongs to each of them.

Use our Allocation of Savings Interest Agreement to indicate who is the beneficial owner of the money in your joint bank accounts and thus the extent to which interest is taxable on each of you.

Notifying HMRC

Once you’ve made the agreement, send a copy of it with a Form 17 election to notify HMRC how the interest is to be allocated for tax purposes. A Form 17 can be viewed and downloaded from the HMRC website (https://www.gov.uk/government/publications/income-tax-declaration-of-beneficial-interests-in-joint-property-and-income-17).

Time limit

A Form 17 must be sent to HMRC within 60 days of the date of declaration. This deadline will not be extended for any reason.