Tax penalties

PennyH

Hello - help please.
I am receiving my Gov. pension also a small private pension. At what level of savings will my tax be increased ? Things are established with me having £5000.

Biggles

I assume you're actually asking, 'At what level of savings will I need to tell the bank/building society to stop paying my interest gross and instead pay it net of tax'?

For the current (08/09) tax year, your tax-free allowance is £6,035 (£9,030 if you're over 65). So it would be if you received over around £1,000pa in interest (around £4,000pa if you're over 65). That might be the equivalent of around £25,000 in a savings account?

Bear in mind if you pay tax on interest that, at the end of the tax year, you can claim back the tax on the first £1,000/£4,000 as that's still your tax-free allowance.

BTW, it's not a 'tax penalty', it's just income tax.
;-)