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Correct amount of tax on intrest>?
cundall
Posts: 859 Forumite
Hi,
I am a basic rate tax payer and i have £15k in saving via icesave and i currently get around £55 pcm after tax though i am getting taxed at around £10 pcm... does this sound correct to you?
Cheers
I am a basic rate tax payer and i have £15k in saving via icesave and i currently get around £55 pcm after tax though i am getting taxed at around £10 pcm... does this sound correct to you?
Cheers
0
Comments
-
Yes..
If you don't need the interest paid monthly - ask IceSave to pay it annually instead.. you would probably be a bit better off overall.
Regards
Sunil0 -
Tax will be at 20%.
20% of £55 is £11.0 -
£15k at 6.03% (gross pa paid monthly) = £75.38 per month gross. So you should receive £60.30, and pay £15.08 tax (at 20%).Stompa0
-
Yes..
If you don't need the interest paid monthly - ask IceSave to pay it annually instead.. you would probably be a bit better off overall.
Regards
Sunil
You won't be any better off asking for annual interest - as long as the monthly interest is paid into the account and stays there. Any bank that offers monthly interest pays a slightly lower rate, but you get interest on the interest so the AER is the same whichever way you want it. Personally, I like to see the interest going in each month!0 -
You won't be any better off asking for annual interest - as long as the monthly interest is paid into the account and stays there. Any bank that offers monthly interest pays a slightly lower rate, but you get interest on the interest so the AER is the same whichever way you want it.
That is true if you are a non-tax payer.
However, if you are a taxpayer then the financial institution would deduct 20% savings tax each month so while the gross/AER rate might appear the same, you can lose out on the compounding if you choose monthly interest.
Regards
Sunil0 -
If you are a taxpayer then the financial institution would deduct 20% savings tax each month so while the gross/AER rate might appear the same, you can lose out on the compounding if you choose monthly interest.
I had never considered that! Still, the gain is tiny. On £15K at 6.2% annually or 6.03% monthly, the gain for a basic rate taxpayer is £4.17 a year. I just like to see the money growing each month!0 -
Thanks everyone!0
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