Tax on interest
Interest on a joint account: who is taxed on what
Enter each holder’s income before tax and the interest the joint account pays in a year. The tool splits the interest in half and works out each person’s tax at the 2027/28 rates.
Tax on a joint account, split 50/50
Tax on the joint interest, 2027/28
£530.00
| First holder pays | £420.00 |
| Second holder pays | £110.00 |
| If all in the lower earner’s name | £440.00 |
HMRC splits joint interest equally unless you show the money is owned in other shares.
Interest on a joint account is not taxed as one sum. Each holder is taxed on their own share and sets it against their own Personal Allowance, starting rate and Personal Savings Allowance. For a married couple or civil partners living together, HMRC’s Trusts, Settlements and Estates Manual (TSEM9814) states that income from jointly held property is treated as belonging to them in equal shares, so each is taxed on half, even if they own the money in unequal shares. The 50/50 rule can be set aside only by a Form 17 declaration under section 837 of the Income Tax Act 2007, which must match a real unequal ownership and reach HMRC within 60 days of being signed. Other joint holders, such as siblings, are taxed on what they are actually entitled to. With £3,000 of interest split between partners earning £62,000 and £18,000, the higher rate partner pays £400.00 on their half in 2026/27 and the other £100.00.
Sums checked by Radif Partners · Editorial policy · How the sums are done
Why the split matters
The allowances belong to people, not to accounts. A couple with £3,000 of interest from a joint account has two sets of allowances to absorb it, but each set only sees half of the interest. When both partners pay tax in the same band the split changes little. When their incomes differ widely, half the interest can be tax free in one person’s hands and taxed at the higher rate in the other’s. The Personal Savings Allowance depends on each holder’s own band under section 12B of the Income Tax Act 2007, and the other layers are set out on the GOV.UK page on tax-free interest.
| Holders’ other income | First holder, 2026/27 | Second holder, 2026/27 | Couple, 2026/27 | Couple, 2027/28 |
|---|---|---|---|---|
| £30,000 and £30,000 | £100.00 | £100.00 | £200.00 | £220.00 |
| £62,000 and £18,000 | £400.00 | £100.00 | £500.00 | £530.00 |
| £55,000 and £9,000 | £400.00 | £0.00 | £400.00 | £420.00 |
| £140,000 and £40,000 | £675.00 | £100.00 | £775.00 | £815.00 |
Two partners on £30,000 each receive £1,500, which is £500 above the £1,000 allowance, so a little tax is due on both sides. Where one partner earns £9,000, their half fits inside unused Personal Allowance. In the last row the first holder is an additional rate taxpayer with no allowance at all, so their half is taxed in full.
The 50/50 rule for spouses and civil partners
For a married couple or civil partners who live together, the law presumes equal ownership of income from jointly held property. HMRC’s manual (TSEM9814) says the couple are taxable on that income 50/50 even if they own the property in unequal shares. GOV.UK’s Form 17 page puts it simply: couples will normally be taxed on an even split of the income between them.
A Form 17 declaration is the only way out of the equal split, and it has conditions. Each partner must actually be entitled to a share other than half, and the income share must match the ownership share (TSEM9850). It cannot be used where the couple own the account as beneficial joint tenants, that is, jointly entitled to the whole rather than holding separate shares; whether a given account is held that way depends on the facts. The form must reach HMRC within 60 days of the date the second partner signs it, a limit HMRC says it has no power to extend, and it applies only to income arising after that date (TSEM9860 and TSEM9862).
Other joint holders
The equal-split presumption is specific to couples living together. Couples who have separated, siblings, parents and adult children, and friends sharing an account are each taxed on the interest they are actually entitled to, and cannot make a declaration (TSEM9844).
Collection
Each holder’s share of the interest is taxed through that holder’s own tax position: their tax code, a Simple Assessment letter or their tax return, as GOV.UK describes on its page on paying tax on savings interest. The routes and timing are on the tax code page, and the band test that halves the allowance is on the Personal Savings Allowance page. GOV.UK states that you cannot hold an ISA with someone else, so in a couple each partner has a separate £20,000 ISA allowance.