Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • MSE Eesha
    • By MSE Eesha 25th Feb 16, 12:44 PM
    • 79Posts
    • 21Thanks
    MSE Eesha
    The new personal savings allowance means some will be better off earning LESS interes
    • #1
    • 25th Feb 16, 12:44 PM
    The new personal savings allowance means some will be better off earning LESS interes 25th Feb 16 at 12:44 PM
    This is the discussion to link on the back of Martin's blog. Please read the blog first, as this discussion follows it.





    Please click 'post reply' to discuss below.
Page 1
    • VT82
    • By VT82 25th Feb 16, 1:50 PM
    • 914 Posts
    • 725 Thanks
    VT82
    • #2
    • 25th Feb 16, 1:50 PM
    • #2
    • 25th Feb 16, 1:50 PM
    Haha gotta love Martin's brain at coming up with this stuff. Right up my street doing weird and wonderful scenario analysis to identify anomalies. Like being back at school.

    Of course seeing as there's no way someone earning £42k plus £1k in savings interest is going to have to complete a tax return (assuming PAYE tax), it's never going to be an issue, but still enjoy the maths
    • bigmc
    • By bigmc 25th Feb 16, 2:30 PM
    • 1 Posts
    • 0 Thanks
    bigmc
    • #3
    • 25th Feb 16, 2:30 PM
    • #3
    • 25th Feb 16, 2:30 PM
    iv got one house i rent out & can i still put the money in to an isa and would this effect me from putting money in to a normal savings account or would i be better off just putting it in to my isa
    • beefturnmail
    • By beefturnmail 25th Feb 16, 5:21 PM
    • 570 Posts
    • 166 Thanks
    beefturnmail
    • #4
    • 25th Feb 16, 5:21 PM
    • #4
    • 25th Feb 16, 5:21 PM
    Am I right in thinking that, following the changes, interest earned within the PSA will NOT count as income when assessing for the High Income Child Benefit tax charge (becasue it is not taxable)?
  • jamesd
    • #5
    • 25th Feb 16, 6:50 PM
    • #5
    • 25th Feb 16, 6:50 PM
    Looks as though Marting and MSE can usefully do more of a FAQ to cover some if the things people are posting about.

    Of course seeing as there's no way someone earning £42k plus £1k in savings interest is going to have to complete a tax return (assuming PAYE tax), it's never going to be an issue
    Originally posted by VT82
    A person with tax to pay is required by law to inform HMRC. Banks and other institutions are obliged by law to inform HMRC about interest earned and HMRC is to use this to pre-populate the information in people's Personal Tax Accounts (those are available already but not yet with this information, everyone has one). So HMRC will just change your PAYE or pension tax code or get in touch if you fail to act as required.

    Am I right in thinking that, following the changes, interest earned within the PSA will NOT count as income when assessing for the High Income Child Benefit tax charge (becasue it is not taxable)?
    Originally posted by beefturnmail
    The savings interest is taxable income, just like savings earned within the normal income tax personal allowance. Just nil tax to pay on it while within the range. I don't know whether there's some specific rule about this and the High Income Child Benefit tax charge. Pension contributions are usually the best way to avoid that.

    iv got one house i rent out & can i still put the money in to an isa and would this effect me from putting money in to a normal savings account or would i be better off just putting it in to my isa
    Originally posted by bigmc
    Normally, just pick the best interest rate after tax effects. That's the easy and correct rule for people with savings that are no more or only a little more than the annual ISA contribution limit. For more on this see Martin's blog entry Is it time to ditch cash ISAs – now that all savings will be tax-free? Those with larger amounts of savings can be better off doing other things if they think about long term planning or play the system with a new Flexible ISA once those can become available from April..
    Last edited by jamesd; 26-02-2016 at 5:23 AM.
    • MSE Martin
    • By MSE Martin 25th Feb 16, 10:43 PM
    • 8,104 Posts
    • 42,234 Thanks
    MSE Martin
    • #6
    • 25th Feb 16, 10:43 PM
    • #6
    • 25th Feb 16, 10:43 PM
    Haha gotta love Martin's brain at coming up with this stuff. Right up my street doing weird and wonderful scenario analysis to identify anomalies. Like being back at school.

    Of course seeing as there's no way someone earning £42k plus £1k in savings interest is going to have to complete a tax return (assuming PAYE tax), it's never going to be an issue, but still enjoy the maths
    Originally posted by VT82
    Thank you

    Not true according to HMRC though. The banks will report interest to it and it will change tax code - so lack of self assesment doesn't mean this won't happen
    Martin Lewis, Money Saving Expert.
    Please note, answers don't constitute financial advice, it is based on generalised journalistic research. Always ensure any decision is made with regards to your own individual circumstance.

    Don't miss out on urgent MoneySaving, get my weekly e-mail at www.moneysavingexpert.com/tips.

    Debt-Free Wannabee Official Nerd Club: (Honorary) Members number 000
    • MSE Martin
    • By MSE Martin 25th Feb 16, 10:44 PM
    • 8,104 Posts
    • 42,234 Thanks
    MSE Martin
    • #7
    • 25th Feb 16, 10:44 PM
    • #7
    • 25th Feb 16, 10:44 PM
    Looks as though Marting and MSE can usefully do more of a FAQ to cover some if the things people are posting about.
    Originally posted by jamesd
    James, we have, this is just my blog on the anomaly. The full PSA guide is here.. http://www.moneysavingexpert.com/savings/personal-savings-allowance?_ga=1.53786536.10764426.1453824159
    Martin Lewis, Money Saving Expert.
    Please note, answers don't constitute financial advice, it is based on generalised journalistic research. Always ensure any decision is made with regards to your own individual circumstance.

    Don't miss out on urgent MoneySaving, get my weekly e-mail at www.moneysavingexpert.com/tips.

    Debt-Free Wannabee Official Nerd Club: (Honorary) Members number 000
  • jamesd
    • #8
    • 26th Feb 16, 5:22 AM
    • #8
    • 26th Feb 16, 5:22 AM
    Thanks. Naughty posters for not checking and naughty me poster for not checking as well.
    • cepheus
    • By cepheus 2nd Mar 16, 10:55 AM
    • 18,375 Posts
    • 18,584 Thanks
    cepheus
    • #9
    • 2nd Mar 16, 10:55 AM
    • #9
    • 2nd Mar 16, 10:55 AM
    I think low earners have been able to obtain £5000 of tax free savings interest since the last budget. Presumably this will continue.

    From April 2015 the starting rate of savings income tax will become 0% and the amount of savings income that the rate applies to will increase from £2,880 to £5,000. This will mean that anyone with a total income (including wage, pension, benefits and savings income) of less than £15,500 – your personal allowance at the 2015 £10,500 rate, plus £5000 - will not pay any tax on their savings, however, you must register for this by filling out an R40 form.
    http://moneyfacts.co.uk/news/savings/savers-helped-by-budget-2014/
    Last edited by cepheus; 02-03-2016 at 3:27 PM.
    Fascism doesn't arrive in fancy dress worn by grotesques and monsters as played out in endless re-runs of the Nazis. Fascism arrives as your friend, restore honour, make you proud, protect & clean up the neighbourhood, remind you of how great you were, clear out the venal and the corrupt, remove anything you feel is unlike you: Michael Rosen
    • nnamak
    • By nnamak 2nd Mar 16, 8:35 PM
    • 6 Posts
    • 0 Thanks
    nnamak
    So, are we expected to contact HMRC if we have several interest amounts which, individually are below £1000 but collectively are above £1000?
    • zagfles
    • By zagfles 2nd Mar 16, 8:48 PM
    • 11,628 Posts
    • 9,614 Thanks
    zagfles
    As I mentioned in another thread, if you do accidently go just over the limit, and don't realise till after the end of the tax year, you can make a gift aid contribution and backdate it.

    So in "scenario 2", contribute £8 to your favourite charity using gift aid. Gross contribution of £10 will extend your basic rate band by £10 and so you'll still be a basic rate taxpayer. You can backdate gift aid on your tax return for gifts made between the end of the tax year and when you fill in your tax return.
  • jamesd
    So, are we expected to contact HMRC if we have several interest amounts which, individually are below £1000 but collectively are above £1000?
    Originally posted by nnamak
    HMRC will eventually tell you and change your tax code. You're also suppose to tell HMRC, yes.

    HMRC will not always know about all forms of taxable interest, for example foreign interest, in time to do routine tax code adjustments, and may not have the information needed to use the right exchange rate if it's foreign.

    HMRC knows because most payers of interest are required to report the payments to HMRC. They are expected to show up in your Personal Tax Account once that's more fully developed. You will then be able to use that to notify HMRC of changes or mistakes.
    Last edited by jamesd; 04-03-2016 at 1:14 AM.
    • paulh2008
    • By paulh2008 3rd Mar 16, 9:20 AM
    • 12 Posts
    • 2 Thanks
    paulh2008
    Another Gotcha!
    I have savings interest and a couple of pensions and I stopped filling in Tax Returns a couple of years ago. At the end of last year I received a Tax Summary which included a figure for 'other income' i.e. savings and dividends which was way more than I had actually received. When I queried it I was told they assumed the last figure I reported on a Return, unless I tell them otherwise. It didn't matter as they were taxed at source, but had I been near the higher rate starting point it would have.

    But now savings is to be paid gross, their assumed figure is added to my pension income to generate the tax code, and I've ended up with a code significantly less than last year, despite the £1000 increase in personal allowance and £1000 new and additional personal savings allowance.

    There is a web page given on the notice of coding to tell them the code is wrong, but I probably had to go through a dozen pages or more from there to get to somewhere where I could do something about it. This is basically a simplified tax return, where they ask you to estimate how much you are going to get in each type of income next year! I just used last years figures.

    Ok maybe many people don't have savings and dividend income in excess of the new savings allowance, but for those that do and haven't been filling in tax returns recently, watch out.
  • jamesd
    One way to notify HMRC of issues like this is via the new Personal Tax Account service. As time goes on that will gradually start to fill out with the details of all income that HMRC has on record for you, making it relatively easy to check and correct things.
    • square-eyes
    • By square-eyes 3rd Mar 16, 12:48 PM
    • 120 Posts
    • 40 Thanks
    square-eyes
    Tax Code 2016/7
    I've just had a notice of a new tax code. They have included £1000 Personal Savings Allowance BUT have deducted over £3000 of untaxed Interest. That means they think I will get over £4000 of interest in the next year. I should be so lucky. I will only get about 1/4 of that. How do I get them to predict a more realistic amount of interest?
    • FOREVER21
    • By FOREVER21 3rd Mar 16, 5:58 PM
    • 1,573 Posts
    • 980 Thanks
    FOREVER21
    I've just had a notice of a new tax code. They have included £1000 Personal Savings Allowance BUT have deducted over £3000 of untaxed Interest. That means they think I will get over £4000 of interest in the next year. I should be so lucky. I will only get about 1/4 of that. How do I get them to predict a more realistic amount of interest?
    Originally posted by square-eyes
    Google"Personal Tax Account" you can the set up an online account and view your tax details, . You can then follow a link to complete a form and submit it to HMRC with your comments.

    I have just done this as they have over estimated my expected interest for next year. I was given a reference number and told to expect a reply within 15days.
    • fulmar
    • By fulmar 4th Mar 16, 2:58 PM
    • 7 Posts
    • 0 Thanks
    fulmar
    PSA.Exceeding the allowance in multiple banks
    Understood that a bank will notify hmrc if £1000 exceeded, but what if there are other banks with smaller amounts in savings interest as well as. Then they wont notify anyone, will they?. Can you not still ask these other banks to volutarilly to pay tax to hmrc at 20%.This would save a lot of self assessment if you are on simple paye on a private pension and you've never self assessed before. .
  • jamesd
    All banks are required to report the amount of interest earned, not just those where the amount of interest earned is over £1,000. Same for P2P and a range of other interest payers.

    Because HMRC should have pretty good information the plan is to have your Personal Tax Account and tax code updated automatically with this information. You still need to check and tell HMRC if there's something missing or if it's too much.
    • Jarj
    • By Jarj 7th Mar 16, 5:06 PM
    • 1 Posts
    • 0 Thanks
    Jarj
    Savings acconts which run for several years
    These accounts don't allow withdrawals even the Government pensioner bonds don't allow penalty free withdrawals yet they have already taken tax notionally from the balance for 3 year bonds. If interest is only counted as income as it is received there should be some retropective credits made. I have some 3 year BS fixed accounts. Do I declare the interest credited but not received?
    • C_Mababejive
    • By C_Mababejive 7th Mar 16, 5:38 PM
    • 10,099 Posts
    • 9,219 Thanks
    C_Mababejive
    As i predicted the country is just beginning to wake up to Mr Osborne's generous "gift" from the last budget. It is a whole world of confusion and lots of people will pay lots more tax. It wasn't a generous allowance. It was another tax raid in disguise.
    Feudal Britain needs land reform. 70% of the land is "owned" by 1 % of the population and at least 50% is unregistered (inherited by landed gentry). Thats why your slave box costs so much..
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

3,976Posts Today

5,493Users online

Martin's Twitter