Bank and building society interest - Example 12

Mr and Mrs Berenyi have 2 joint accounts – one with ABC Bank and one with XYZ Bank. Mrs Berenyi has taken early retirement and her yearly income, including her interest, is less than her income tax personal allowance.

Mr Berenyi still works and is a higher rate taxpayer.

Their interest from both banks looks like this

Mrs Berenyi - Gross £1000, Tax £200

Mr Berenyi - Gross £1000, Tax £200

Mrs Berenyi wants to receive her interest without tax taken off from both of her joint accounts. She completes a form R85 for each of these accounts.

ABC Bank accept the form and in future they pay Mrs Berenyi’s half share of the interest without tax taken off, and they continue to pay Mr Berenyi’s half share of the interest with tax taken off.

Their interest from ABC Bank looks like this

Mrs Berenyi - Gross £500, Tax £0

Mr Berenyi - Gross £500, Tax £100

XYZ Bank do not accept the form, because they have chosen not to allow ‘partial registration’ on their accounts – this means if an account is a joint account all account holders have to complete a form R85 or none of them can.

Their interest from XYZ Bank looks like this

Mrs Berenyi - Grosss £500, Tax £100
Mr Berenyi - Gross £500, Tax £100

Mrs Berenyi can claim back the £100 tax that has been taken from her share of the above account. She does this by completing repayment form R40 (PDF 97K).