What is a joint account?

A joint account is a bank account shared between two or more individuals, allowing all parties equal access to manage and use the funds. Well over 60% of British couples utilize joint accounts, according to polling data.¹

This article includes tips, suggestions, and general information. We recommend that you always do your own research and consider getting independent tax, financial, and legal advice before making any important decision.

While joint accounts are commonly used by couples, family members or business partners can also use them to simplify shared financial responsibilities.

This article explains why a joint account can be appealing, how it differs from other types of accounts, and what to consider before opening one.

Benefits of a joint account

The advantages of a joint account can simplify and enhance financial management. Here are some examples:

• Convenience. Joint accounts streamline the process of money management, such as household bills or mortgage payments, making it easier for both parties to contribute without needing multiple transactions.
• Transparency. All account holders fully see transactions and balances, promoting trust and openness.
• Collaborative financial goals. Joint accounts make it easier to work together on shared financial goals, like saving for a home or for the holidays.
• Shared responsibility. Both individuals equally share the responsibility for managing a joint account.

Things to consider before opening a joint account

Before opening a joint account, there are important factors to think about, such as how the account might affect one's credit score and the potential tax implications.

Joint account credit score

It's important to know that missed payments or defaults by one account holder can negatively impact the credit score of all joint owners. This shared responsibility means that each party’s financial behaviour can affect the overall credit standing of the account.

Tax on joint accounts

Under the UK's personal savings allowance (PSA), the interest earned on a joint account is typically split between the account holders.² Each person is taxed on their share of the interest, which could influence tax liabilities, especially for those whose income is within a higher tax bracket.

Tenancy in common vs. survivorship

Understanding the differences between tenancy in common and survivorship accounts, two types of joint accounts, is crucial.

Tenancy in common allows each account holder to own a specific share of the account, which can be passed on to heirs. In contrast, survivorship accounts automatically transfer ownership to the surviving account holder upon the death of the other.

How joint accounts differ from individual accounts

A joint account is shared between two or more individuals, allowing all parties to manage and access the funds, while an individual account is owned and operated by one person. Joint accounts are ideal for managing shared expenses and financial goals, such as saving for a house, while individual accounts offer more personal control.

PayPal provides important guidance to help customers choose how different types of accounts match their financial and savings needs.

How to open a joint account

To open a joint account in the UK, customers generally need to provide a form of identification, such as a passport or driver's license, and proof of address, like a utility bill.

Different types of joint accounts are available, including checking accounts for everyday transactions, savings accounts for accumulating interest on deposits, and money market accounts, which often offer higher interest rates but may have higher balance requirements. Customers should always check with their preferred bank for specific application steps and eligibility requirements.

PayPal offers convenient, hassle-free ways of opening personal accounts for a range of financial needs.