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HMRC internal manual

Trusts, Settlements and Estates Manual

From
HM Revenue & Customs
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Ownership and income tax: Specific types of property: bank and building society accounts: example 6: joint names - resulting trust

A (an additional rate taxpayer) contributes 100% of the funds in a savings account held in the name of A and B (A’s adult daughter, a student and non-taxpayer). A and B are the legal owners of the account. As legal owners, both can make withdrawals. But legal ownership of a bank account does not necessarily mean beneficial ownership (TSEM9930).

The bank operates its usual policy (TSEM9932) and allocates the interest 50/50 to each named account holder when informing HMRC of the amounts under the usual third party arrangements.

In the course of a compliance check, HMRC finds that A provided all the funds, but he has self assessed on only half the income. The presumption of resulting trust (TSEM9600) is that A holds 100% of the beneficial interest in the funds. There is no evidence of a counter-presumption (TSEM9630) such that A has transferred the beneficial interest in the funds to B. The property held jointly by A and B is held on resulting trust for A, and the interest belongs to A. So A is taxable on all the interest. It does not matter that B had access to the funds in the account.