Will i pay tax on my interest?

Samfau

Hi, im looking to open a savings account soon (already have a tax free ISA for this year) and have a question about interest tax.

I am currently employed and tax is deducted from my payslip. However, i will not earn more than the personal allowance by the end of this tax year, so i will pay no tax. I will also not pay any tax in the next financial year as i will be leaving my job to go to university in september and again not earning more than the untaxable allowance.

Does this mean i also pay no tax on any interest from a savings account or will i still have to pay the 20% on this as i am effectively a taxpayer because i am employed and have an income.

Some advice would be much appreciated. Thanks

CLAPTON

if your total earning plus (gross) interest (excluding ISAs) will be less than 6035 then you can fill in an R85 and receive the interest without tax being deducted.

oldfella

you can also take advantage of the 10% tax layer for a further £2320

masonic

oldfella wrote: »

you can also take advantage of the 10% tax layer for a further £2320

Did that not get scrapped?

Aegis

masonic wrote: »

Did that not get scrapped?

Not for savings.

No_6

Interesting post Aegis, as my wife works,with gross pay of £8500.
Does that mean she can have a savings account and fill in a R85.
Regards
6

Aegis

No_6 wrote: »

Interesting post Aegis, as my wife works,with gross pay of £8500.
Does that mean she can have a savings account and fill in a R85.
Regards
6

No, she has to fill out a claim form to get the tax back from HMRC. If you're earning over the lower earnings threshold you have to pay the tax and ask for it back at the end of the financial year.

Samfau

thanks, i thought that'd probably be the case.

LGG_2

Aegis wrote: »

No, she has to fill out a claim form to get the tax back from HMRC. If you're earning over the lower earnings threshold you have to pay the tax and ask for it back at the end of the financial year.

so if u earn anything between the basic allocation and 8355 u should only be paying 10% tax on your savings instead of 20%.?

Mikeyorks

Yes. If your earned income is less than £6035 .... then you pay 0% up to £6035. If your earned income is above £6035 but less than £8355 ..... then the 10% band kicks in.

BUT - if your earned income exceeds £8355 ...... the 10% band doesn't exist. As it's purely related to savings income .... which is the top slice of your income and sits above earned income.

LGG_2

cheers i never knew this. looks like i can claim abit back at the end of the tax year although i think ill just be right on the boarder interms of what i earn as it varies with being a casual worker. do i need to add on any intrest earned from my savings into that allocation ie its classed as a wage? with that added on ill prob be a few hundred over the 8335 limit