Will i pay tax on my interest?

Mikeyorks

No_6 wrote: »

as my wife works,with gross pay of £8500.

Any savings income she has ..... is taxable at 20%. The 10% band only exists for people whose savings income hits the band formed by Personal Allowance (PA) + £2320.

So - unless she's over 65 and with a higher PA - her earned income exceeds the (£6035 + £2320) £8355 that would bring the 10% band into play.

Mikeyorks

masonic wrote: »

Did that not get scrapped?

It did get scrapped - that's what all the furore was about which led to most of us getting an extra £600 in Personal Allowances (£5435 to £6035) from Sept 08.

But a new Savings only 10% rate was introduced in Apr 08 (£2320) .... but which only applies to Savings interest.

However its very different from the 10% tax rate that was abolished. As soon as you exceeded your Personal Allowance - you entered the 10% tax rate, so it applied to everyone who paid tax.

But the 10% Savings rate ..... is a pseudo rate .... in that it affects relatively few people. To benefit from it your income needs to be such that your Savings interest hits the band formed by Personal Allowance + £2320. If your earned income exceeds PA + £2320 ...... then the new 10% rate doesn't exist for you.

It was sold as 'simplification' ..... but it's clearly not simpler for either HMRC or their customers.

Hungerdunger

This page on the HMRC website is quite useful and you can click on various scenarios at the bottom of the page to see how the 10% rate may affect you.

Mikeyorks

That wasn't there originally - they must have become fed up with queries.

Shame that the last example (Fernando) they've managed to screw up significantly (£1355 residue of savings limit calculated correctly ... then translated to £1755 @ 10%). Pity - as it's probably the most appropriate example, for those who can use part of the 10% rate.

cottager

Interesting....
I could probably claim then, as I'm paid just below the tax threshold these days, and I doubt my savings interest is anything like as high as £2k.

But this form R40 -- does it just stand alone, or if I start using that and reclaiming tax does it then mean I'll have to do a full tax return every year as well? OH has to as he's self-employed (but his accountant does the return), but I've been in PAYE forever and never had to do one -- not sure I'd have a clue

oldfella

no relation between the R40 and the full tax return. However you need to define all your income on the R40

JimmyTheWig

Doing a tax return is really not that hard.
Establishing (and minimising!) a self-employed person's profits for tax purposes can be a little tricky, but doing a tax return where you just put in your income from work and income from interest is not difficult. If you can sign up to an internet forum and post then you should be able to do a tax return if you've got access to all the figures.

cottager

Mikeyorks wrote: »

But a new Savings only 10% rate was introduced in Apr 08 (£2320).

Nothing to claim yet then, till after 5 April, if we're still in the first year?

oldfella wrote: »

you need to define all your income on the R40

So I see...
This could be where having a number of accounts and 'bits' all over the place isn't a good idea!
A spreadsheet would be good, for a record of the calculation as much as anything else, but although I use Excel a little as a database for something quite different, I wouldn't know how to start setting up a spreadsheet. Would there be any suitable templates to download somewhere, to get me on the right track?

JimmyTheWig wrote: »

Doing a tax return is really not that hard.
... If you can sign up to an internet forum and post then you should be able to do a tax return if you've got access to all the figures.

Your faith may be misplaced, but this sounds encouraging

Would you know if supporting documentation is required, or just the total? I don't mean I'd be making it up, the 'proof' would be there if needed, but would they need copies or anything sent with the R40?

Cheers all, thanks for the help.

Lokolo

It states on R40 form - "Do not send us any personal records, or tax certificates or vouchers with your form."

They can tell if you are lying or not from your NI number

-

Also I thought R40 form could be used as a tax return form? They both more or less do the same thing, declare income etc.

cottager

Ah, thanks Lokolo. Sorry, I missed that bit.