Joint bank accounts

A joint bank or building society account is an account in the name of two or more people.

Everyone named on the account is able to pay money in or take it out – although sometimes more than one person needs to agree to this.

Joint accounts are mostly used by:

• married couples, civil partners and couples who live together
• housemates who have shared expenses – such as rent and bills.

Joint accounts aren’t suitable if you need long-term access to someone else’s money. For example, if you need to help an elderly relative look after their finances.

If you have any doubts about whether to set up a joint account, it’s important not to do it. You don’t need a joint account if you simply want to split everything 50:50, for example.

If you’re not sure whether a joint account is right for you, it’s worth talking to your partner.

If you and your partner are claiming Universal Credit, you’ll get one payment for both of you – not one each. But this doesn’t mean you have to open a joint account. If you’d rather, you can get the money paid into an account with only one of your names on it.

Opening a joint account isn’t very different from opening a normal bank account.

Each account holder just needs to fill in their section of the application. You may need to provide proof of address and proof of identity, although if you already have a current account with them, this step might not be needed.

Speak to your bank during the application process, and ask them to explain:

• if anyone can take out money without getting permission from others on the account 
• how overdrafts will be handled. Usually, each account holder is responsible for paying back all the money owed. The bank or building society might take money from someone’s personal account to cover the overdraft in the joint account 
• how to handle disagreements or the end of a relationship between joint account holders. 

The formal agreement on who gets to do what with the account is called the ‘mandate’ or ‘authority’. 

All account holders have to sign the mandate when you open the account. 

This mandate is different to a ‘third-party’ mandate. A third-party mandate is where you give a specific person permission to run your bank  or building society account. For example, if you have a long-term illness or are going abroad for a time.

Basic rate tax payers can earn up to £1,000 interest on their savings without having to pay tax and higher rate tax payers can earn up to £500 worth of interest tax-free.

Most of the time, interest is split equally between both account holders and will go towards each of your Personal Savings Allowances (PSA).

This is the amount of savings interest you can earn each year without paying tax. If you’re in different tax brackets, the interest is still split evenly.

You won’t be able to close an account until any overdraft has been paid off.

Some providers will let one person close a joint account, as long as there isn’t a dispute registered. Otherwise, you’ll both need to sign and send an account closure form or visit a branch together.

Your bank or building society will need to know how the money will be distributed between you, and what should happen to any standing orders or Direct Debits.

Details of all financial associations will remain on your credit report unless you tell the credit reference agencies otherwise.

Contact all three agencies – Callcredit, Equifax and Experian – to issue a ‘notice of disassociation’. This means their financial circumstances won’t affect your credit applications in future. You may be asked for proof that your financial connection has been broken

If someone you share an account with dies, the joint account will need to be valued as ‘jointly owned asset’ when their estate is worked out.

If you’re having problems with your fellow account holders, perhaps because a relationship has ended, cancel the mandate.

This will freeze the account. This means that no-one, including you, will be able to withdraw money.

Your bank or building society will only unlock the account when everyone agrees on how to split the money.

And, if you can’t reach an agreement, the only option might be to let the courts decide who gets what.

Everyone has the right to financial independence. If your partner is controlling your money or running up debts in your name, it’s financial abuse.

But there’s no need to struggle on alone.

Just like other accounts, joint accounts are protected by the Financial Services Compensation Scheme (FSCS) – up to £85,000.

For joint accounts, the FSCS assumes that each account holder holds an equal share.

So, for a two-person joint account, you could deposit £170,000, or £85,000 each – and it would all be protected.