Can You Have a Joint ISA With Your Partner?

Individual Savings Accounts (ISAs) are a popular vehicle for tax-efficient saving and investing. These accounts are a creation of the United Kingdom’s tax system, designed to help individuals save money without paying UK income tax or capital gains tax on the growth within the account. While providing significant tax advantages in the UK, the Internal Revenue Service (IRS) does not recognize the tax-free status of ISAs for US tax purposes. This means that for US citizens, income and gains within an ISA are taxable under US law, and specific reporting requirements may apply.

Understanding ISA Ownership Rules

ISAs are strictly individual accounts and cannot be held jointly by partners or any other individuals. This individual ownership is a fundamental principle established by His Majesty’s Revenue and Customs (HMRC), the UK’s tax authority. Each person maintains their own annual ISA allowance, which is the maximum amount they can contribute to their ISA accounts in a single tax year. For the 2024/2025 tax year, this allowance is set at £20,000. An individual can contribute to different types of ISAs within their overall annual allowance, such as Cash ISAs, Stocks and Shares ISAs, Innovative Finance ISAs, and Lifetime ISAs.

Joint Financial Planning with Individual ISAs

Even though ISAs are individual accounts, partners can coordinate their financial planning to maximize their combined tax-efficient savings. Each partner can open and contribute to their own ISA, effectively doubling the household’s potential tax-free savings capacity in the UK. For example, two partners could collectively save up to £40,000 per year within their separate ISA allowances. One partner can gift money to the other to contribute to their ISA, provided the recipient stays within their own annual allowance. Such gifts between spouses or civil partners are exempt from UK Inheritance Tax, enabling couples to utilize both allowances fully, fostering a shared approach to long-term financial goals.

Beyond ISAs: Other Joint Savings Options

For couples seeking joint ownership of savings, several alternatives exist outside the ISA framework. Joint bank accounts are a common choice, allowing both partners to access and manage funds collectively, though any interest earned is subject to income tax. Joint investment accounts also offer shared ownership, allowing partners to invest in stocks, bonds, or other assets together. For tax purposes, income and capital gains from these accounts are split evenly between the account holders, unless another arrangement is explicitly declared. Unlike ISAs, these joint accounts do not provide tax-free growth, and investment returns are subject to applicable taxes in both the UK and US for US taxpayers, lacking the specific tax advantages of an ISA.

What Happens to an ISA Upon Death

Upon the death of an ISA holder, specific rules apply that can benefit a surviving spouse or civil partner, who may be eligible for an Additional Permitted Subscription (APS) allowance. This allowance is provided in addition to the survivor’s own annual ISA allowance. This allows the surviving spouse or civil partner to transfer an amount equivalent to the deceased’s ISA savings into their own ISA, preserving the tax-efficient status of those inherited funds within the UK system. The surviving partner typically has a specific timeframe, often around three years from the date of death or 180 days after the administration of the estate, to utilize this allowance.