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  • FIRST POST
    • MSE Helen Saxon
    • By MSE Helen Saxon 15th Oct 15, 5:29 PM
    • 75Posts
    • 44Thanks
    MSE Helen Saxon
    Personal Savings Allowance guide
    • #1
    • 15th Oct 15, 5:29 PM
    Personal Savings Allowance guide 15th Oct 15 at 5:29 PM
    Hi!

    This is the discussion thread for the



    Click reply below to discuss. If you havenít already, join the forum to reply. If you arenít sure how it all works, read our New to Forum? Intro Guide.


    Thanks folks,
Page 22
    • Doc N
    • By Doc N 24th Aug 17, 6:09 AM
    • 6,458 Posts
    • 19,346 Thanks
    Doc N
    Same here - but without Microsoft Money keeping track of what's going on would be impossible!
    • Over62
    • By Over62 24th Aug 17, 10:04 AM
    • 42 Posts
    • 22 Thanks
    Over62
    Tax year
    Can I just remind everyone that a tax year, which ends on 5 April, is not the same as a financial year, which ends on 31 March. The terms are not interchangeable.
    • polymaff
    • By polymaff 24th Aug 17, 12:07 PM
    • 1,852 Posts
    • 797 Thanks
    polymaff
    Wot, only 44
    • Consumerist
    • By Consumerist 24th Aug 17, 12:27 PM
    • 4,731 Posts
    • 2,352 Thanks
    Consumerist
    Can I just remind everyone that a tax year, which ends on 5 April, is not the same as a financial year, which ends on 31 March. The terms are not interchangeable.
    Originally posted by Over62
    Now, I always thought a financial year was the period used by businesses for their annual report and accounts (broadly speaking) and could be any date as long as it was the same date each year.
    Warning: In the kingdom of the blind, the one-eyed man is king.
    • polymaff
    • By polymaff 24th Aug 17, 12:27 PM
    • 1,852 Posts
    • 797 Thanks
    polymaff
    Can I just remind everyone that a tax year, which ends on 5 April, is not the same as a financial year, which ends on 31 March. The terms are not interchangeable.
    Originally posted by Over62
    In UK terms, a financial year is just a twelve-month period. No start or finish date is implied - it is up to the individual organisation to choose.

    When dealing with the taxation of personal income the tax year does, indeed, end on 5th April.

    Bet it has been asked before but who - without resort to the internet - knows why the 5th April?
    • moneyfoolish
    • By moneyfoolish 24th Aug 17, 12:29 PM
    • 469 Posts
    • 274 Thanks
    moneyfoolish
    Same here - but without Microsoft Money keeping track of what's going on would be impossible!
    Originally posted by Doc N
    As a PAYE tax payer I find it pretty easy without having to do much. Last year I made a rough estimate that I would get in the region of £2500 in savings interest and informed HMRC. It turned out that the actual figure was around £2200 so I got a rebate.
    This year they based my tax code on last year's amount but I did a rough estimate and knew it would reduce to around £1700 so I informed HMRC of that and I got a new tax code. At the end of the year it will be a little bit more or a little bit less and they'll either give me a rebate or change next year's code for an underpayment. I always tend to over-estimate as I'd rather have a small rebate than have slightly lower earnings in the following year.
    • Eco Miser
    • By Eco Miser 25th Aug 17, 10:36 PM
    • 3,320 Posts
    • 3,083 Thanks
    Eco Miser
    Bet it has been asked before but who - without resort to the internet - knows why the 5th April?
    Originally posted by polymaff
    When we switched from the Julian to Gregorian calendar, we 'lost' days, but the treasury just moved the year end to be 365 days after the previous year end.
    Why the year end was previously Lady Day, I've no idea.
    Eco Miser
    Saving money for well over half a century
    • soulsaver
    • By soulsaver 26th Aug 17, 12:06 AM
    • 1,542 Posts
    • 573 Thanks
    soulsaver
    As a PAYE tax payer I find it pretty easy without having to do much. Last year I made a rough estimate that I would get in the region of £2500 in savings interest and informed HMRC. It turned out that the actual figure was around £2200 so I got a rebate.
    This year they based my tax code on last year's amount but I did a rough estimate and knew it would reduce to around £1700 so I informed HMRC of that and I got a new tax code. At the end of the year it will be a little bit more or a little bit less and they'll either give me a rebate or change next year's code for an underpayment. I always tend to over-estimate as I'd rather have a small rebate than have slightly lower earnings in the following year.
    Originally posted by moneyfoolish
    Are you telling them the year end actual figure or are they picking up the info from the banks & making the rebate? If it's you how are you doing that?
    • polymaff
    • By polymaff 26th Aug 17, 12:41 PM
    • 1,852 Posts
    • 797 Thanks
    polymaff
    When we switched from the Julian to Gregorian calendar, we 'lost' days, but the treasury just moved the year end to be 365 days after the previous year end.
    Why the year end was previously Lady Day, I've no idea.
    Originally posted by Eco Miser
    What a good day for the general start of the year 25th March was - and would be now. Winter definitely losing its grip etc. etc.
    • polymaff
    • By polymaff 26th Aug 17, 12:45 PM
    • 1,852 Posts
    • 797 Thanks
    polymaff
    When we switched from the Julian to Gregorian calendar, we 'lost' days, but the treasury just moved the year end to be 365 days after the previous year end.
    Why the year end was previously Lady Day, I've no idea.
    Originally posted by Eco Miser
    What a good day for the general start of the year 25th March was - and would be now. Winter definitely losing its grip etc. etc.
    • Tirian
    • By Tirian 13th Jan 18, 2:44 PM
    • 944 Posts
    • 360 Thanks
    Tirian
    I'm a little confused by this. I'm a higher (not additional rate) taxpayer. I received around £100 interest in the tax year 2016-17.

    On that basis, I should not be paying any tax on the interest I receive.

    But when I filled in my tax return, I initially put £200 interest as I forgot to divide the amount earned in our joint account by two.

    On the calculation page of the tax return it showed up as £216 * 0% = 0 due.

    But when I amended the amount to £108, my total tax due went down by £22 - even though the calculation page of the tax return still showed the tax due on the savings interest as £108 * 0% = 0.

    In other words, even though they are allegedly not levying tax on the interest, it is nevertheless still being counted in my income somewhere in the calculations and being added to my overall tax due. Surely this can't be right?
    For where your treasure is, there will your heart be also ...
    • Consumerist
    • By Consumerist 13th Jan 18, 2:55 PM
    • 4,731 Posts
    • 2,352 Thanks
    Consumerist
    I'm a little confused by this. I'm a higher (not additional rate) taxpayer. I received around £100 interest in the tax year 2016-17.

    On that basis, I should not be paying any tax on the interest I receive.

    But when I filled in my tax return, I initially put £200 interest as I forgot to divide the amount earned in our joint account by two.

    On the calculation page of the tax return it showed up as £216 * 0% = 0 due.

    But when I amended the amount to £108, my total tax due went down by £22 - even though the calculation page of the tax return still showed the tax due on the savings interest as £108 * 0% = 0.

    In other words, even though they are allegedly not levying tax on the interest, it is nevertheless still being counted in my income somewhere in the calculations and being added to my overall tax due. Surely this can't be right?
    Originally posted by Tirian
    In round numbers, if you estimate £200 savings interest, HMRC will set your PSA to £200 but if you only receive £100 savings interest then you are only entitled to £100 PSA and HMRC will need to adjust your tax code accordingly.

    Hope I understood your question correctly.
    Last edited by Consumerist; 13-01-2018 at 2:58 PM.
    Warning: In the kingdom of the blind, the one-eyed man is king.
    • Tirian
    • By Tirian 13th Jan 18, 3:15 PM
    • 944 Posts
    • 360 Thanks
    Tirian
    No, these are not estimates. These are the for the actual amount of interest received in the tax year 2016-17.

    The actual interest received on the account was £216. However on my tax return I need to enter £108 because it is a joint account and therefore only 50% of the interest is mine.

    My surprise was that making this correction reduced the amount of income tax I am due to pay. While this is good, what it does show is that I am being charged tax in relation to the amount of interest earned on this account, even though it is below what should be my £500 savings income that I am permitted to receive tax free.

    On closer examination of the calculations, it turns out that despite being taxed directly at 0%, the savings interest is still being included in my overall income - and as such contributing to a reduction in my personal allowance. The amount that is removed from my personal allowance is then taxed at 40%.

    In other words, the tax-free savings allowance isn't tax free for some people even if they receive less than their threshold for tax-free interest ... bloody crazy system.
    For where your treasure is, there will your heart be also ...
    • polymaff
    • By polymaff 13th Jan 18, 4:38 PM
    • 1,852 Posts
    • 797 Thanks
    polymaff
    In other words, the tax-free savings allowance isn't tax free for some people even if they receive less than their threshold for tax-free interest ... bloody crazy system.
    Originally posted by Tirian
    Not crazy at all. Tax-free and Taxed at 0% are quite different concepts - and have been quite different for a very long time.

    Your original posting contains errors and made-up terminology. Your use of the term highlighted above, likewise.

    Those who make up their own terminology are doomed to misunderstand the rest of the world, QED.
    Last edited by polymaff; 13-01-2018 at 4:41 PM.
    • Tirian
    • By Tirian 13th Jan 18, 5:27 PM
    • 944 Posts
    • 360 Thanks
    Tirian
    Yes, well thank goodness for smug gits like you who can look down their noses at all the rest of us, eh?

    From the HMRC website "You may also get up to £1,000 of interest tax-free depending on which Income Tax band you’re in. This is your Personal Savings Allowance."

    From the HMRC tax return calculation, the interest income is shown as taxed at 0%.

    So when you've crawled out of your own !!!, then you can see that HMRC themselves refer to this both as "tax free" and "taxed at 0%".

    Do have nice day!
    Last edited by Tirian; 13-01-2018 at 5:31 PM.
    For where your treasure is, there will your heart be also ...
    • polymaff
    • By polymaff 13th Jan 18, 5:40 PM
    • 1,852 Posts
    • 797 Thanks
    polymaff
    HMRC themselves refer to this both as "tax free" and "taxed at 0%".
    Originally posted by Tirian
    Well, if that's your benchmark, you're doomed.
    • Tirian
    • By Tirian 13th Jan 18, 5:46 PM
    • 944 Posts
    • 360 Thanks
    Tirian
    Well, if that's your benchmark, you're doomed.
    Originally posted by polymaff
    You're really the helpful type, I can see. Now, unless there's anything else you want to sneer at ...
    For where your treasure is, there will your heart be also ...
    • Dazed and confused
    • By Dazed and confused 13th Jan 18, 5:49 PM
    • 2,090 Posts
    • 942 Thanks
    Dazed and confused
    Tirian,

    You might not have any tax to pay on the interest but merely having it (outside of an ISA) means you have got an extra £108 taxable income.

    It might be taxed at 0% courtesy of either the £5000 starter savings rate of 0% (probably not relevant to you) or the personal savings allowance rate of 0% but simply by having this taxable interest could mean, for example, you lose some of your Personal Allowance or Married Couples Allowance or have extra High Income Child Benefit charge to pay

    Without more details about your own circumstances (for 2016:17) it's really impossible to say but as having this income can most definitely increase the overall amount of tax you have to pay then its perfectly possible for the income reduction to reduce your tax bill even though the income itself was being taxed at 0%.
    Last edited by Dazed and confused; 13-01-2018 at 6:05 PM.
    • zagfles
    • By zagfles 13th Jan 18, 6:06 PM
    • 12,572 Posts
    • 10,663 Thanks
    zagfles
    Titian,

    You might not have any tax to pay on the interest but merely having it (outside of an ISA) means you have got an extra £108 taxable income.

    It might be taxed at 0% courtesy of either the £5000 starter savings rate of 0% (probably not relevant to you) or the personal savings allowance rate of 0% but simply be having this taxable interest could mean you lose some of your Personal Allowance or Married Couples Allowance or have extra High Income Child Benefit charge to pay.

    Without more details about your own circumstances (for 2016:17) it's really impossible to say but as having this income can most definitely increase the overall amount of tax you have to pay then its perfectly possible for the income reduction to reduce your tax bill even though the income itself was being taxed at 0%.
    Originally posted by Dazed and confused
    Yes, basically you need to think of it like the personal allowance. The same applies.

    Whenever the govt have increased the personal allowance (by say £1000), you might think that you can earn £1000 more and pay no more tax. Usually this would be the case, however in the case of things like the child benefit high income charge at £50k+ and the personal allowance reduction at £100k+, you entire taxable income is used, including income within allowances, such as the personal allowance and the personal savings allowance.
    • Tirian
    • By Tirian 13th Jan 18, 6:47 PM
    • 944 Posts
    • 360 Thanks
    Tirian
    Yes, that's basically what it is. £108 extra income = £54 off my personal allowance = £54 more income being taxed at 40%, = £22 more tax.

    Not exactly intuitive. And certainly not mentioned in any of the budget hoop-la about the tax-free savings initiative.

    Still, at least it's only a half hit. Time to change the account to wife's name only!
    For where your treasure is, there will your heart be also ...
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