Claiming benefit when you have large savings?

gunnaknow

Oh well, it looks as if I'm not eligible for anything then. Thanks for trying to help me though. I'll look into getting tax relief though.

cw18 wrote: »

And you should be filing a Tax Return to reclaim that each year. Even though you're not working you still have a personal tax allowance (currently £6035), so shouldn't be paying tax on that amount each year.

What if my income from interest was slightly over £6035? Could I get tax relief on the first £6035 and pay tax on the rest, or will all of it be taxed if I'm over £6035? What about if my income was below £6035 but the tax relief took it above £6035? My interest is about £5980 after tax. Thanks.

cw18

You don't pay any tax on the first £6035, you just pay on anything above that (same as if you were working).

They'll take the gross interest as your income, so if you earned £7k in interest that had all been taxed at 20%, then you'd have received £5,600 and paid £1400 in tax. Inland Revenue will take the £7k, ignore the first £6035, and apply tax to the remaining £965 (which would be £193 -- so you'd be due a refund of £1400-£193=£1207). But don't forget anything in an ISA is tax free anyway, so you don't need to declare the interest from those at all as far as I'm aware

(but tax rates and personal allowances before April 2008 were slightly different, and you only paid 10% on some and 22% for the next tier -- the above is just to give you a rough idea)

[Deleted User]

The 10% band was on the first £2000 before it was scrapped