How do I qualify for tax exemption savings

cagneyfan · 26 August 2008 at 4:52PM

I have £100,000 in various savings - premium bonds, shares, savings etc. I no longer work due to ill health. I receive approx £385 per month in War Pension and £400 a month in benefit. Do I qualify for tax exemption or have I done the correct thing in not filling in an R85. I'm scared to do so in case I don't qualify

sloughflint · 26 August 2008 at 5:10PM

Doubtful. How much of the savings are in tax free accounts?
You are probably allowed £6035 tax free income.
Or see this table for other allowances:
http://www.hmrc.gov.uk/rates/it.htm

£100 000 @6% say is already £6000 without counting your pension and benefits ( are they taxable?)

Give a few more details and we can calculate more accurately. But my first guess is no.

opinions4u · 26 August 2008 at 5:11PM

What specific benefit do you receive? Is this taxable? I'll assume your pension is.

Premium Bonds are tax exempt, but have a limit on holding and aren't (averaged out) a particularly good form of savings unless you pay 40% tax (or win the £1m).

cagneyfan · 26 August 2008 at 5:12PM

I really am dense about understanding financial jargon. I have £30,000 in premium bonds, £30,000 in cash isa's and the rest is in a bank account (ing direct). I receive War Pension and Incapacity benefit

sloughflint · 26 August 2008 at 5:13PM

Don't worry. We'll help you. I just need to figure out what is taxable and what isn't.
If you know, let us know ( war pension taxable? IB taxable?)otherwise I'll dig around and then do some sums.
Dare I ask how old you are?

sloughflint · 26 August 2008 at 5:32PM

I gather from HMRC that IB is taxable after week 29 but can't find anything on war pensions. Can anyone confirm?
http://www.hmrc.gov.uk/incometax/taxable-income.htm

jem16 · 26 August 2008 at 5:39PM

I believe thay are tax-free.

http://www.helptheaged.org.uk/en-gb/AdviceSupport/FinancialAdvice/HelpClaimingBenefits/Disability/as_disability_160106_4.htm

Lokolo · 26 August 2008 at 5:40PM

http://www.adviceguide.org.uk/em/index/life/tax/tax-exempt_and_taxable_income.htm

Under Social security benefits, Non-means tested there is: war disablement pension, including allowances (not sure if this is the same thing though?) says tax exempt.

sloughflint · 26 August 2008 at 6:09PM

As I see things, your [strike]£ 30 000[/strike] £40 000 with ING is taxable and your IB is taxable.
Not sure what your interest rate is with ING but I'm guessing it's the 4.75% rate.

You receive £4800 IB per year
You receive approx £1900 gross interest per year from ING.
giving a total of £6700 that potentially could be taxed.

You are given a tax free allowance of £6035
So in fact you only need to pay 10 % tax on £665 which is £66.50

Your ING savings interest will already have been taxed at 20% which is £380

So you have overpaid by approximately £ 313.50 this financial year.
You need to claim this back from HMRC using an R40 form

http://www.hmrc.gov.uk/incometax/tax-free-interest.htm

sloughflint · 26 August 2008 at 6:12PM

The only thing I'm not clear on is this 10% on savings interest thing. Would OP qualify here?
Regardless, Op has clearly been overpaying tax and is due a rebate.

Better rates can be found than ING too.

cagneyfan · 26 August 2008 at 6:24PM

thanks for all your help. I can't say I'm any more au fait with all this financial jargon - you're all geniuses. But thanks for taking the time to try and educate a cretin! n.b. special thanks to sloughflint

How do I qualify for tax exemption savings

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