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By Chandraketu Tripathi · Updated April 2026 · Fact-checked Tax · April 2026Joint bank accounts and savings accounts are common between married couples and civil partners — but the tax treatment of the interest earned is widely misunderstood. HMRC's rules on how to split interest from joint accounts can either create an unexpected tax bill or, with the right approach, help minimise your household's overall tax liability.
How HMRC Splits Joint Account InterestBy default, HMRC treats interest from a joint bank account as being split equally (50/50) between account holders, regardless of who deposited the money. Each account holder applies their own Personal Savings Allowance (£1,000 for basic rate taxpayers, £500 for higher rate) to their 50% share. This default split can actually be beneficial in many households — for example, if one partner is a non-taxpayer (earning below £12,570) or a basic rate taxpayer with a large PSA, and the other is a higher rate taxpayer, the 50/50 split means half the interest falls with the lower-taxpayer partner and faces lower or zero tax. Declaring a Different Split — Form 17If the actual beneficial ownership of a joint account is different from 50/50 — for example, if one partner deposited all the money — you can declare the actual split to HMRC using Form 17 (Declaration of beneficial interests in joint property). This must reflect the genuine legal ownership and be supported by documentation. Married couples and civil partners can only use Form 17 for unequal splits — cohabiting couples are treated as owning assets 50/50 automatically. 💡 For many married couples, the 50/50 split on joint account interest is actually optimal. If the lower-earning partner is a non-taxpayer, their 50% share is tax-free (combined with their starter rate band). Before changing anything, calculate whether the existing 50/50 split is already minimising your household tax bill. ISAs and Joint AccountsISAs cannot be held as joint accounts — each person must have their own individual ISA. However, both partners can open separate ISAs and each has a £20,000 annual allowance, giving a household ISA allowance of £40,000 per year. Married couples should prioritise filling both ISA allowances to shelter as much savings interest as possible from tax. ⭐ OUR VERDICT The HMRC treatment of joint bank account interest is straightforward in practice — HMRC automatically splits interest 50/50 and collects any tax due via tax code adjustments. The most important action for couples is to ensure they both have individual ISAs to shelter savings interest tax-free, and to check whether the default 50/50 split on taxable joint accounts is optimal for their household tax situation or whether a different arrangement would be more efficient. Frequently Asked QuestionsHow does HMRC know about my joint bank account interest? Banks report all interest paid on savings accounts — including joint accounts — to HMRC annually. HMRC automatically attributes 50% of joint account interest to each account holder. If your share of interest exceeds your Personal Savings Allowance, HMRC will adjust your tax code or request you complete a Self Assessment return. Can married couples split joint account interest differently? Yes. Married couples and civil partners can declare a different beneficial interest split using Form 17 (Declaration of beneficial interests in joint property), provided this reflects the genuine legal ownership of the funds. The declared split must be supported by documentation and reflect actual beneficial ownership — it cannot be used purely for tax planning purposes. Can a joint ISA be opened? No. ISAs are individual accounts and cannot be held jointly. However, each person can open their own ISA. Married couples can each use the full £20,000 annual allowance, giving a household combined ISA allowance of £40,000 per tax year. Does joint account interest count toward both PSAs? Yes. The 50% share of interest attributable to each joint account holder counts against each person's own Personal Savings Allowance independently. A basic rate taxpayer gets £1,000 PSA and a higher rate taxpayer gets £500 — each applied to their respective 50% share of joint account interest. |
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