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Should I pay tax on savings if I'm not earning
Steffan
Posts: 13 Forumite
I have £35k in savings in an ICICI savings account and I've been out of work for a few months now but still paying tax on my savings. Is this correct or should my savings not be taxed if I'm not earning?
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Comments
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If you have earned over £5435 in this tax year you are still liable to pay tax on your savings.0
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If your earnings including interest for the year are less than your personal allowance you can reclaim any excess tax you've paid. If you expect your total earnings next year to be less than your allowance you can register with the bank to BS to have interest paid untaxed.0
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I was travelling between Dec 06 and Dec 07 and still not got a job come March 08, so I can claim tax back on all savings?0
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For interest received in the year 07-08 it doesn't look as though you need pay tax - but have you been claiming JSA?
Do you receive interest monthly or has it been paid at some point in the year, with the next payment due some time after 5 April.0 -
Not claiming JSA as I have too much savings and it's paid monthly (ICICI savings account). Do I claim the tax back from them or the inland revenue.0
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OK. So you must have been told that you are not eligible for contribution-based JSA (which has nothing to do with capital).
As the interest is paid monthly and you've received almost all of it this tax year (perhaps some more on 31 March or 1 April) then you will need to reclaim it from HMRC.
For the payments due to be paid on or after 6 April 2008, you should be able to tell ICICI and they will start paying interest gross. However, if you think you will find paid employment in the next few months, then you would no doubt be earning more than the personal allowance (tax-free amount) and it may not be worth registering for gross interest when you would then have to get that sorted out through tax deductions later. I would guess it depends on what you think your chances are of finding paid work.
If in doubt, contact ICICI to register for gross interest. Sorry I don't have an account with them and so don't know how they deal with the notification - whether you can do it all online, for instance. Others may know but I guess their website should help you there too.0 -
This just made me realise something. I took a year off work from 2005, I got the PAYE tax back for the month I went back to work (March 06) but I never claimed the tax back from my saving accounts.
The HMRC site says I can claim within five years after the 31 January following the end of the tax year concerned, so I think I'll contact them. I dont know why I didnt do this in the first place.0 -
If an account pay interest on say June 2006, this would fall into the tax year 2006/07 wouldnt it.
I only ask because during the period I wasnt working (March 05-Mar 06), Cahoot was my main account, and I had the interest paid annually in June, so this means I cant claim. (for the June 05-06 interest)
If however I had the interest paid monthly, or closed the account before April 06, I could have claimed. Is this correct?0 -
Broadly - yes. Tax is due on interest when the interest is paid .... not when it accrued.If you want to test the depth of the water .........don't use both feet !0
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Steffan
I'm not a tax expert, but your question brought a similar question to my mind: 'if I'm a footballer earning £100,000 per week and get injured and no longer play football, should I pay tax because I'm no longer employed, even thought I have £1.55m in my bank account?'. With £35,000 in an account, you are more comfortable than many of us who are employed. Until the savings falls below a particular threshold, any 'rich' person like you should pay tax. Reflect on this, it may answer your question.0
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