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HMRC internal manual

Trusts, Settlements and Estates Manual

Ownership and income tax: Specific types of property: bank and building society accounts: example 8: joint names - resulting trust

A (an additional rate taxpayer) provides £100,000 for a high-interest savings account held in the name of A , B and C (A’s adult daughter and adult son, basic rate taxpayers).

The bank operates its usual policy and allocates the interest one third each to A, B and C 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 has not self assessed on any income. A says that at the end of each tax year she agrees with her children who needs money, and they can take what they need out of the interest. For example, B needed money for a car, and C wanted a holiday, and all the interest for the year was used up. A says that B and C should be taxed on the amounts they received.

There is a presumption of resulting trust to A (TSEM9600). In this case, there is no evidence to rebut that presumption (TSEM9630). Taxation is on the basis of entitlement (TSEM9310), and there is no evidence that B and C were entitled to any income. A has merely given money belonging to her to B and C.

A is taxable on all the interest.