Being taxed twice on savings

john_s_2

opinions4u wrote: »

Although if you add your interest to your capital, then your capital has quite clearly gained in value. Some might describe a gain in value of capital as a capital gain!!

I just want to start off by saying I've found this whole discussion fascinating. I've been lurching from one side of the argument to the other, almost with every post!

I think that someone who is defending taxing the interest on savings, instead of treating it as a capital gain, would say that you had a choice to add that interest to your capital. You could have withdrawn it and used it for something else.

If your shares go up in value (or your house, or whatever) you have no choice about that. You can't use that additional money for anything else. You can sell some shares, so that your remaining holdings are worth as much as they were when you bought them, but you'd have fewer shares.

Each pound in your savings account is still worth a pound.

As for the tax and benefits system needing an overhaul... That must go for pretty much everything in society, surely!