How do I qualify for tax exemption savings

sloughflint

Don't worry mandy-j0. You probably won't need to do maths for the forms to claim the money back.
I think you will be able to claim back 6 years worth of overpaid tax.
ING will send you certificates each year telling you how much interest has been earnt and how much tax has been paid.
If you phone HMRC, they will probably advise how to go about things.

sloughflint

http://search2.hmrc.gov.uk/kbroker/hmrc/forms/viewform.jsp?formId=818

How to claim tax back

If you think you've paid too much tax on your interest you can claim it back. To do this you'll need to fill in a form R40 Tax Repayment Form. You'll have to do this for each year you think you paid too much tax.
Time limits for claiming back tax

If you’ve overpaid tax the time limit for making a claim is no later than 31 January five years after the end of the tax year (5 April) in which the overpayment was made. For example, a claim for the tax year 2002-03 which ended on 5 April 2003 must be made by 31 January 2009.
Go to form R40 and help notes on completing the form

jem16

sloughflint wrote: »

The only thing I'm not clear on is this 10% on savings interest thing. Would OP qualify here?

From my understanding of the 10% situation I believe only 10% would be due as it's savings income that takes her over the personal allowance but below the next £2230.

sloughflint

jem16 wrote: »

From my understanding of the 10% situation I believe only 10% would be due as it's savings income that takes her over the personal allowance but below the next £2230.

Thanks. That's what I wondered so OP is barely due to pay any tax at all then. A grand sum of £19!!!
It would be so much less hassle in the future if R85 could be filled out.
I wonder if it is worth tying up a little of the 30k into tax free (index linked certs) just to bring OP under the threshold and not have to worry about claiming back each year?

I suppose it depends if OP is living off the savings interest in which case it might not be such a good idea and an R40 form each year will be required.

jem16

sloughflint wrote: »

Thanks. That's what I wondered so OP is barely due to pay any tax at all then. A grand sum of £19!!!

I think the amount in ING must be £40,000 - £100k - £30k in Premium Bonds and £30k in ISAs.

So total income would be £6700 minus £6035 personal allowance, so £635 taxable at 10% = £63.50

It would be so much less hassle in the future if R85 could be filled out.
I wonder if it is worth tying up a little of the 30k into tax free (index linked certs) just to bring OP under the threshold and not have to worry about claiming back each year?

Possible but as you say depends on circumstances.

Mikeyorks

jem16 wrote: »

I think the amount in ING must be £40,000

You beat me to it.

...... so the answer to the OP is that unfortunately she can't complete an R85. She could consider NS&I index linking in order to reduce her liability to zero (and into the R85 target area). But - she would be better advised to seriously consider liquidating the whole of the PBs and putting that £30k into something generating interest - despite that moves her further from the R85 frame.

At the moment her savings are being eroded by 5% inflation .... so moving £30k into something like a 7% term deposit is a better bet if she is only bumping along the bottom of the 3% average return on PBs. And looking at transferring the ISAs to the best rate available (she doesn't say if she uses the interest) is another sensible option.

sloughflint

:wall::wall::wall:

Mikeyorks

sloughflint wrote: »

:wall::wall::wall:

An extremely helpful set of posts from you - one mild error is more than allowed.

cagneyfan

I've just been on some website and from what I can gather my personal allowance is under £6,000 and when I put my details in, it said I wasn't allowed to fill out an R85. So I assume that means I won't be allowed to fill out an R40, so I'm not going to coz I'm scared of what the tax office will do if I fill these forms out

zzzLazyDaisy

Mandy-jo you the only reason you are not allowed to fill in an R85 is because you can only do that if your income from all sources is below the personal allowance tax band. Yours is slightly above this.

However, the first 'slice' of savings interest in your situation is only taxable at 10%, but the banks deduct the standard 20%. So you need to fill in an R40 to claim back the overpaid tax.

They are two completely different forms.

Please listen to sloughflint, he has a good understanding of these things and has helped me to get my head round a similar problem.

The R40 isn't complicated and by the sounds of it you probably have a few hundred pounds in tax rebate due to you.

Daisy