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Where a married couple hold savings accounts and other investments in joint names, the income from those investments is split 50:50 for tax purposes, unless there is an election to allocate the income in accordance with their beneficial interests. This is particularly important where the couples' marginal tax rates are different now that there are different personal savings allowances.
Where the husband pays tax at 40% and the wife is only a 20% basic rate taxpayer, there can be significant tax savings.
HMRC need to be notified that the split of income is other than 50:50 and we can help you complete the appropriate forms.
Note that in the case of buy to let properties the election can only be made where the property is owned as “tenants in common” and you may need to get your solicitor to check the ownership position.
Typically couples own their home as joint tenants. This means that both own the whole of the home. With tenants in common each owns a set share - this can either be half each, or a defined percentage. If you own your home as joint tenants, then if one partner dies, the other automatically becomes the sole owner of the home. With tenants in common one member of a couple can pass on their share of the home on death, say to their children, while the other member of the couple can continue to live there, passing on their half on death. Tenants in common can also prevent you having to sell your home if you need to go into long-term care.
It is also a way for couples who have put unequal deposits into a property to protect their share in case they split up. For example, The property can be held as tenants in common, with a document showing one owner put in 70 per cent of the deposit and one owner 30 per cent and in the event of break-up and sale the initial deposits should be returned as such.
Registered office: 61 Friar Gate, Derby, Derbyshire, DE1 1DJ T: 01332 202660
Adrian Mooy & Co is the trading name of Adrian Mooy & Co Ltd. Registered in England No. 05770414
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61 Friar Gate Derby DE1 1DJ