Will i pay tax on my interest?

cottager

Mikeyorks wrote: »

Perhaps not easier - but that is now more accurate! Sorry .... I'll go away and cough a bit more now!

Before reading what you posted in this thread I was only aware of the R85 scenario for paying no tax on savings by sending the form to each bank/building society. Not so long ago after seeing something on another thread about this I looked at the HMRC pages to see if I could do this, but of course found I couldn't use R85 because I do earn something which counts towards the calculation.

Up till then I must admit I'd misunderstood the term 'taxpayer'. Maybe it's a common mistake, I don't know, but before I would have always said I wasn't a 'taxpayer' as I don't pay any tax on my earned income (it's too low), but reading the guidance I realised this wasn't the issue. Then I read on a bit more and kind of realised there might still be a way of reclaiming retrospectively, but found it quite confusing.

I didn't get as far as learning more about the R40 form till you, Aegis and others mentioned reclaiming here, and Hungerdunger gave a link to the page you said hadn't existed before. Up till then what I thought I'd have to do if wanting to reclaim anything was fill in a tax return... which put me off as I've never had to do one! The rules and different bands/thresholds seemed quite complicated anyway -- my head doesn't easily get around mathematical calculations I'm afraid! As I thought the amount I could reclaim would probably be negligible anyway, I'd left it.

A combination of everyone's posts here means I've seen the error of my previous thinking, and that R40 is the way to do it. And I do follow what you've just told me, which believe me is quite an achievement! It won't be exactly a 5-minute job collating all the info needed, but I'm relieved I don't have to actually have to make the calculation -- they will. I just have to provide the details, which I hadn't realised either till seeing the R40.

Thanks to you (and all) for your patience and trouble... and out of your sick-bed too

EDIT: Soulsaver, thanks too -- yes, as I've now realised. Not a new form at all, as I'd also thought :rolleyes:

Mikeyorks

cottager wrote: »

Up till then I must admit I'd misunderstood the term 'taxpayer'. Maybe it's a common mistake

I think that's right. How many people realise that they're a taxpayer because purely they're suffering 20% deduction on possibly relatively small amounts of interest? But then you ratchet that up a bit and you have the people with relatively sizeable interest .... but whose earned income / State Pension etc does not cause them to pay tax 'directly'.

The Taxback campaign was launched several years ago, by HMRC under Govt pressure, and IMHO targetted primarily the first group - in order to educate that they could reclaim or R85 the tax liability. But both the 1st and 2nd groups have now been inflated by the fact that Personal Allowances (in particular for the over 65) have increased significantly this year. So - whilst the R85 scenario is relatively easy to grasp? The 2nd situation where you have to suffer deduction at 20% - in order to subsequently claim back 10% - is more difficult. And the Savings tax at 10% ..... makes it far more difficult to grasp despite the now redundant tax band at 10% was a virtually identical concept?

Perhaps Mr Cameron is right to consider aborting tax on savings interest. At least it would save me giving most of my money to the OH .. to reduce our liability!

cottager

Mikeyorks wrote: »

whilst the R85 scenario is relatively easy to grasp?

Sure. If its scope and eligibility is misunderstood by the likes of me, it's simple to grasp what the situation is once explained.
And R85 is more 'known about', being fairly prominent in savings blurb.

The 2nd situation where you have to suffer deduction at 20% - in order to subsequently claim back 10% - is more difficult. And the Savings tax at 10% ..... makes it far more difficult to grasp despite the now redundant tax band at 10% was a virtually identical concept?

Not when it's explained that way (the part in bold). Very succinct and clear: send to HMRC immediately!

Perhaps Mr Cameron is right to consider aborting tax on savings interest. At least it would save me giving most of my money to the OH .. to reduce our liability!

At least it would untie one knot in the tax system; and it's about time that 'cats cradle' of a mess was more straightforward and transparent.
Oh, and we OH's always like to be useful... :rotfl: