How do I qualify for tax exemption savings

cagneyfan

I have £100,000 in various savings - premium bonds, shares, savings etc. I no longer work due to ill health. I receive approx £385 per month in War Pension and £400 a month in benefit. Do I qualify for tax exemption or have I done the correct thing in not filling in an R85. I'm scared to do so in case I don't qualify

sloughflint

Doubtful. How much of the savings are in tax free accounts?
You are probably allowed £6035 tax free income.
Or see this table for other allowances:
http://www.hmrc.gov.uk/rates/it.htm

£100 000 @6% say is already £6000 without counting your pension and benefits ( are they taxable?)

Give a few more details and we can calculate more accurately. But my first guess is no.

opinions4u

What specific benefit do you receive? Is this taxable? I'll assume your pension is.

Premium Bonds are tax exempt, but have a limit on holding and aren't (averaged out) a particularly good form of savings unless you pay 40% tax (or win the £1m).

cagneyfan

I really am dense about understanding financial jargon. I have £30,000 in premium bonds, £30,000 in cash isa's and the rest is in a bank account (ing direct). I receive War Pension and Incapacity benefit

sloughflint

Don't worry. We'll help you. I just need to figure out what is taxable and what isn't.
If you know, let us know ( war pension taxable? IB taxable?)otherwise I'll dig around and then do some sums.
Dare I ask how old you are?

sloughflint

I gather from HMRC that IB is taxable after week 29 but can't find anything on war pensions. Can anyone confirm?
http://www.hmrc.gov.uk/incometax/taxable-income.htm

jem16

I believe thay are tax-free.

http://www.helptheaged.org.uk/en-gb/AdviceSupport/FinancialAdvice/HelpClaimingBenefits/Disability/as_disability_160106_4.htm

Lokolo

http://www.adviceguide.org.uk/em/index/life/tax/tax-exempt_and_taxable_income.htm

Under Social security benefits, Non-means tested there is: war disablement pension, including allowances (not sure if this is the same thing though?) says tax exempt.

sloughflint

As I see things, your [strike]£ 30 000[/strike] £40 000 with ING is taxable and your IB is taxable.
Not sure what your interest rate is with ING but I'm guessing it's the 4.75% rate.

You receive £4800 IB per year
You receive approx £1900 gross interest per year from ING.
giving a total of £6700 that potentially could be taxed.

You are given a tax free allowance of £6035
So in fact you only need to pay 10 % tax on £665 which is £66.50

Your ING savings interest will already have been taxed at 20% which is £380

So you have overpaid by approximately £ 313.50 this financial year.
You need to claim this back from HMRC using an R40 form

http://www.hmrc.gov.uk/incometax/tax-free-interest.htm

sloughflint

The only thing I'm not clear on is this 10% on savings interest thing. Would OP qualify here?
Regardless, Op has clearly been overpaying tax and is due a rebate.

Better rates can be found than ING too.

cagneyfan

thanks for all your help. I can't say I'm any more au fait with all this financial jargon - you're all geniuses. But thanks for taking the time to try and educate a cretin! n.b. special thanks to sloughflint