bank interest & tax

supergolden88

I was filling in part of my SA yesterday and they seem to want you to declare any interest gained - even if this has been taxed.

I have earned very little interest overall (and most of it on the money I have been saving to pay my taxes with) but I was wondering

Do you also have to declare any interest gained on a pension??

ceeforcat

Interest has tax deducted at source at 20% - if you are a higher rate tax payer you will be required to pay the additional 20% on your SA. Similarly, if you are a non-taxpayer, you will be enttled to a refund of the tax deducted.

Interest gained (presumably for late payment) on your pension is taxable.

supergolden88

now I am confused - your bank taxes your savings but you then get them taxed again? What is the band for higer rate tax payer?

also the pension maybe I did not phrase that right - I have a certain amount (say 15k) in a pension fund which I have not contributed to for years. It has if anything been losing money - is that amount taxable?

jem16

supergolden88 wrote: »

now I am confused - your bank taxes your savings but you then get them taxed again? What is the band for higer rate tax payer?

If you have taxable income (and that includes interest from savings) over £40,835 then you are a higher rate taxpayer paying 40% tax on all income over that amount. If you are a higher rate taxpayer you will also have to pay 40% tax on your savings income - the bank takes 20% off at source and then HMRC collect the other 20% via your tax return.

also the pension maybe I did not phrase that right - I have a certain amount (say 15k) in a pension fund which I have not contributed to for years. It has if anything been losing money - is that amount taxable?

Pension contributions attract tax relief - they are not taxable. Once you take the pension in retirement the income is taxable.

supergolden88

thanks for taking the time to reply! Very helpful.

And my interest comes to maybe £150 total so I hope they are kind to me