Kaupthing Edge interest is taxed?

cheekykid

Sorry for the n00b question but since this is an offshore bank why is their rate taxed for Uk residents?
Also me being unemployeed with nationa insurance number does that qualify me for tax free interest?

a7man

You can claim back the 20% tax deducted at source as you are a non tax payer.

You are taxed because you pay tax when money is remitted (brought into) the UK. If you were to let the interest accumulate within the account then move abroad before withdrawing you would not have the tax liability.

cheekykid

a7man wrote: »

You can claim back the 20% tax deducted at source as you are a non tax payer.

You are taxed because you pay tax when money is remitted (brought into) the UK. If you were to let the interest accumulate within the account then move abroad before withdrawing you would not have the tax liability.

Thanks mate

Pollycat

cheekykid
If your total taxable income is less than the income tax personal allowances you are due, you should complete form R85.
Your bank or building society interest will then be paid gross.

For more info,
http://www.kaupthingedge.co.uk/help/Faqs.aspx?id=03

Regards

Andy_L

a7man wrote: »

You can claim back the 20% tax deducted at source as you are a non tax payer.

You are taxed because you pay tax when money is remitted (brought into) the UK. If you were to let the interest accumulate within the account then move abroad before withdrawing you would not have the tax liability.

Although you would probably have a tax liability in the country you moved to, which may be more or less than the UK

Ashlion

Yes it does qualify you for tax-free interest if your income (including savings) is below your personal tax limit.
If your age is under 65 years on 5 April 08, you get a tax-free income limit of £5,225, or £6035 next year (If you are older the limit is higher.) Check out the R85 helpsheet for more details:
http://www.hmrc.gov.uk/tdsi/key-info.htm

Some NSI products are tax-free. It runs through all their products both taxable and tax-free here:
http://www.hmrc.gov.uk/tdsi/key-info.htm

Ashlion

*I meant the income includes interest derived from savings.

If you have already paid tax on interest that you didn't need to, reclaim it with the R40 form.
http://www.hmrc.gov.uk/incometax/personal-allow.htm

cheekykid

Thanks for your help

Somne things I am not sure of....

Firstly, if I let the interest in the account without transfering it to a uk based account then I'll be taxed zero on my interest earnings. However what happens if I suddenly decide to take out 10k? Will that withdraw be taxed? If yes on the basis of what?

Secondly, I am unemployed and my savings total 190-200k:j.
The interest earned from this amount is let's say 12k. Since £5,225 is non taxed then I will be taxed only for the remainder £6775 right?.

Question: How does the tax free allowance of £5225 work in relation to the monthly interest I'll be earning? They simply cut down the tax they impose on my interest per month basis or they do it at the end of the year by returning to me the overpaid tax?
Is the10%(£2320) allowance still in effect and does it affect me?
If my account is joint then am almost tax free am I not? since the tax free allowance would go up to £10,500 leaving only 1,500 to be taxed

Many thanks for your help

talana

since this is an offshore bank why is their rate taxed for Uk residents?

Just to clarify your original question, KE are not an offshore bank. The parent company is Icelandic, certainly, but that's not the same thing.

........if I let the interest in the account without transfering it to a uk based account....

See above, KE is a UK based account.

LucyTheDwarf

10% rate is still in effect for savings only. The personal allowance is £6035 from September onwards, and the 10% band is £2320 above this. In practice, you will be deducted tax at 20% of your interest, and will have to claim the tax overpayment back at the end of the tax year.

http://www.hmrc.gov.uk/tdsi/ten-per-cent-guidance.htm#ex2

cheekykid

LucyTheDwarf wrote: »

10% rate is still in effect for savings only. The personal allowance is £6035 from September onwards, and the 10% band is £2320 above this. In practice, you will be deducted tax at 20% of your interest, and will have to claim the tax overpayment back at the end of the tax year.

http://www.hmrc.gov.uk/tdsi/ten-per-cent-guidance.htm#ex2

In my case where the account is joint does the allowance double?