Abolish tax on savings

twokcc

Why are we being taxed on savings? It was bad enough with interest rates at about 7% could nearly get a real return after inflation, with latest rate reductions it will now be impossible. The prudent are bailing out the economy(and nulabour). Come on Martin take this on start a campaign to get tax removed from all savings not just the meagre amount that you can put into an Isa each year- or go for ISA limit of say £250K max which you can put max in in year one
Would need to be able to still invest with different savings providers under ISA umbrella and if you withdraw in tax year you can top it back up

TAKE UP THE CHALLENGE MARTIN

opinions4u

Brave suggestion.

I do worry for older people who rely on their interest to provide an income. The latest cuts have effectively cut their "pensions" by 40% within 2 months.

There is, of course, the other idea that government should levy national insurance on savings income. Not too keen on that one myself.

Within the current regime we should remember:

Couples should maximise their tax allowances to minimise the state take.

Don't forget the 10% tax band does still exist for savings interest for lower earner - but you need to claim it back!

Try to build up your ISA balances annually - don't keep withdrawing from them unless you really have to (a couple can build up £36k in tax free savings within the next 4 and a half years).

Review the rates you are getting on your accounts at the moment - and keep reviewing them. HBOS seem to be keen to fix people for a year and allow flexibililty:

BM - 6.4% fixed - 4 withdrawals / no deposits: http://www.askbm.co.uk/savings/t/easy/product.asp?id=206

Bank of Scotland - 5.8% fixed - 4 withdrawals / additional deposits allowed: http://www.bankofscotlandhalifax.co.uk/savings/savingshome.asp

Hlaifax (their current account customers only) - 6% fixed - 4 withdrawals / additional deposits allowed: www.halifax.co.uk/savings

The second two accounts basically offer a nice home for any other fixed term accounts you have maturing over the next 12 months. The first one is an excellent home for people to stick money they were planning to pay off a mortgage as the net rate of 5.12% (basic rate taxpayer) may well be more than their new mortgage rates!

neil324

Its an idea, not sure of the fiqures but it would cost them to much. It would come across as being unfair to people who don't have a pot to p*ss in either a bit like with interest rate reductions and people with no mortgages. Maybe tax cuts would have been fairer but what about people not working.......

ScarletBea

Another option would be like it's done in Portugal, where all savings are taxed at the same 20%, independently of how much income tax rate you have.
Yes, I know this would only affect the high-tax payers, but it's still helpful for them.

(of course the radical solution would be to put everyone at, say, 5% tax on savings, but really go after the super rich that manage to evade tax...)

rebeccaj

BM, Halifax and Bank of Scotland all under the same FSCS registration so a max of £50k across the three for safety. (£100k if joint acount)

RayWolfe

So, if I had £10,000,000 deposited in various banks, you would like me to sit at home draw the interest and pay no tax?
What other tax do you wish to increase in order to cover the reduction in government revenue?

rebeccaj

ScarletBea wrote: »

Another option would be like it's done in Portugal, where all savings are taxed at the same 20%, independently of how much income tax rate you have.
Yes, I know this would only affect the high-tax payers, but it's still helpful for them.

but not helpful for the pensioners who need the savings income to supplement their robbed pensions. These people have just watched their incomes go further down whilst things like energy bills and council tax have gone right up.

Personally I think the high tax payers don't need any more help. :rolleyes:

StarRover

RayWolfe wrote: »

What other tax do you wish to increase in order to cover the reduction in government revenue?

Whenever tax cuts are suggested we hear this refrain. The alternative to raising other taxes is, of course, reducing existing government expenditure.

treecity

rebeccaj wrote: »

but not helpful for the pensioners who need the savings income to supplement their robbed pensions. These people have just watched their incomes go further down whilst things like energy bills and council tax have gone right up.

Personally I think the high tax payers don't need any more help. :rolleyes:

Why don't high tax payers need any help? There was a time when people in high paying jobs just about went in to the high tax paying band, now though the percentage is very large. Someone who earns 250K per year can not and should not be grouped in with people who earn 45K, IMO

Zebra

twokcc wrote: »

Why are we being taxed on savings?

It's not your savings that are being taxed - it's your income from those savings, just like every other type of income. And why not?

john_s_2

StarRover wrote: »

Whenever tax cuts are suggested we hear this refrain. The alternative to raising other taxes is, of course, reducing existing government expenditure.

Whenever I get into a discussion with someone who's saying "[insert taxation of your choice] should be cut / abolished," I always say what the earlier poster said (which other tax would you like increased instead?)

But I also add two other questions:

1. Or which expenditure would you like to see cut?

And the final clincher, which usually results in them mumbling something inaudible:

2. And would that tax increase or expenditure reduction affect you?