Early "retirement" Income from cash savings.

shindigger

Hi
I am currently pondering a downsize and would like clarification on a couple of points.

I have a £40k cash isa, together with other savings.

My question is this: If the monthly income from a Cash ISA is ignored for tax purposes, does that mean that my personal tax code would apply to the income from my other savings? If we assume that my total interest on my other savings is under £6k (personal tax code) doest that mean i could receive this interest free of tax?

My experience with Icesave has really made me question the whole grand design. Get up at 7 every day for work, put money in bank and nearly lose it. Or get up at 10 every day and go and play golf, paying no tax. Tempted.


Cheers.

Geoffo_M

If your interest (excluding ISA) is less than £6,055, you can register as a non taxpayer, and receive interest from your savings gross. Don't forget also, that the next £2,320 is taxed at only 10%

cos69

I am afraid Gordon did away with the 10% rate for 2008/9 so its now just 20%.
http://www.hmrc.gov.uk/rates/it.htm

oldfella

I am afraid Gordon did away with the 10% rate for 2008/9 so its now just 20%.

---

not so, if your earned income is less than the tax threshold, you still receive the 10% band

shindigger

Cheers all. The only issue now then, is 0% IRs!!

opinions4u

cos69 wrote: »

I am afraid Gordon did away with the 10% rate for 2008/9 so its now just 20%.
http://www.hmrc.gov.uk/rates/it.htm

He kept the 10% band for savings:

2007-08 £ per year 2008-09 £ per year Starting rate: 10% £0-£2,230 - - Basic rate: 22% £2,231-£34,600 Basic rate: 20%* £0-£36,000 Higher rate: 40% Over £34,600 Higher rate: 40%* Over £34,800**

*There will be a new 10% starting rate for savings income only, with a limit of £2320. If an individual’s taxable non-savings income is above this limit then the 10% savings rate will not be applicable.

cos69

opinions4u wrote: »

He kept the 10% band for savings:

2007-08 £ per year 2008-09 £ per year Starting rate: 10% £0-£2,230 - - Basic rate: 22% £2,231-£34,600 Basic rate: 20%* £0-£36,000 Higher rate: 40% Over £34,600 Higher rate: 40%* Over £34,800**

*There will be a new 10% starting rate for savings income only, with a limit of £2320. If an individual’s taxable non-savings income is above this limit then the 10% savings rate will not be applicable.

Thanks for pointing that out - keep forgetting because it no longer applies to me

Geoffo_M

opinions4u wrote: »

*There will be a new 10% starting rate for savings income only, with a limit of £2320. If an individual’s taxable non-savings income is above this limit then the 10% savings rate will not be applicable.

So if your interest is £10,000 say, do you get £6,055 at no tax, £2,320 at 10%, and the balance at 20%. Or are you saying that only if your gross interest is LESS than £8,375 (£6,055 + £2,320) that you get the 10%? I'm a bit confused.

juicyjude

Yes this may apply to me soon as I hope to finish work in April next year (convenient for the start of tax year) and I may actually be better off tax wise than working. I only earn £500 per month so have a lot of working out to do. Dont want to give Gordon a penny more than I have to, and currently I pay 20% on my small wage, as some months I do earn slightly more. Why is tax so taxing? :eek:

Paul.J.M

move to cyprus NO TAX ON PERSONNAL INCOME UPTO 17,000 EURO i did.

MrExample

Paul.J.M wrote: »

move to cyprus NO TAX ON PERSONNAL INCOME UPTO 17,000 EURO i did.

Or Dubai (no income tax).

Iceland has 10% flat tax IIRC. Not sure I'd recommend moving there, though. :rolleyes: