In the family
If a husband and wife jointly own an asset which produces income, the law provides that the income is split 50:50 for tax, even if that isn’t actually the case. You can tell HMRC on a particular form that the real split is different, but they only apply it from when you sign it – and you have to send it to them within 60 days of that date.
On the other hand, if your under-18 children have assets which came from you, and the income is more than £100 a year, you pay the tax on it as if you received the income directly – you don’t get the benefit of the children’s personal allowances.
In a recent case a man hadn’t reported any income on his tax return from a joint account with his wife or from accounts he said belonged to his children. HMRC assessed him on 50% of one and all of the other. The Tribunal confirmed that he couldn’t get out of the tax on the joint income until and unless he filled in the form and sent it in; but they accepted his evidence that the money in the children’s accounts had come from their grandfather, not from him, so he wasn’t taxable on the interest.
If you are not sure which family members have to pay tax on family income – or which family members would pay less tax – we can advise you.
