Joint Finances and Gifting – Whose Money Is It Anyway?

| 27th October 2025

Ask any couple whose money it is, and you’ll probably get three answers:

  1. “Ours.”
  2. “Mine.”
  3. “Whichever account has the better online banking app this week.”

For day-to-day life, that works fine. But when it comes to Inheritance Tax, HMRC is far less romantic — they like things labelled neatly as “his” or “hers.”

Whose account does the gift come from?

For IHT purposes, the name on the account or investment matters. If it’s in Mr’s name, then the gift is his — even if he only got the money there because Mrs let him “borrow” it. A joint account is usually treated as 50/50, unless you can show otherwise.

Why does this matter?

Because gifts eat into your £325,000 nil-rate band, and HMRC want to know who’s been doing the giving. In practice, they don’t mind if one spouse transfers from “the easy-to-log-into account,” so long as you keep your records straight and consistent.

What about gifts out of surplus income?

Here’s where the rules tighten up. The exemption for “normal expenditure out of income” only works if the gifts come from the income of the person making them. HMRC aren’t interested in the theory of joint money — they want to see whose payslip (or pension statement) the money came from.

A simple example

Mr earns £70,000 a year. Mrs earns £10,000. Together they give their children £10,000 every Christmas.

  • If the gift is from Mr, it can fall under the surplus income exemption — plenty of headroom.
  • If it’s from Mrs, it won’t qualify — her income doesn’t stretch that far.
  • If it’s from a joint account, HMRC will usually say £5,000 each. That means only half could qualify for the exemption.

So what should couples do?

  • Keep a record of gifts — who gave what, when, and from which account.
  • Be consistent in how you describe “joint” gifts.
  • If you’re relying on the surplus income exemption, make sure the paper trail points to the right spouse.

In short: while most couples happily treat money as “ours,” HMRC prefer it as “his and hers.” A bit of careful planning (and record-keeping) stops it becoming a headache — and saves the arguments over whose turn it was to pay anyway!