The time has come to completely scrap tax on savings

masonic

LesU wrote: »

So my only asset in 2009 for the painting I no longer have wouldn't just be £15,000 more in my bank than I had at the beginning of the year?
It looks and feels like income from an investment.
Remember, if I had sold the painting for £100,000 (I wish), the taxman would be very interested.

It may look to you like income from an investment, but it isn't. It's a capital gain from an investment. The interest earned on the £15k sitting in your bank account is income... and the taxman will be interested in any amount of capital gain over your personal allowance.

Aegis

LesU wrote: »

So my only asset in 2009 for the painting I no longer have wouldn't just be £15,000 more in my bank than I had at the beginning of the year?
It looks and feels like income from an investment.
Remember, if I had sold the painting for £100,000 (I wish), the taxman would be very interested.

Of course he would. He'd be interested in your capital gains tax being paid on time, at 18% of the profit after the allowance. Once you put that into a savings account, however, your capital is no longer at risk (aside from the chance of the institution failing, which although possible is unlikely to result in actual monetary losses), and as such you pay income tax on the interest instead of capital gains tax.

It's just the way things work. There's no real justification to allow people tax-free income from all of their savings from what I've seen.

undercoat11

The chancellor must be losing quite a bit of money in tax on interest. After all, 20% on 5% is a lot more than 20% on 1.5%.

I am also surprised that some of you like to pay tax on their interest - very odd - tells me that may be you don't have much interest on which to pay tax.

Aegis

undercoat11 wrote: »

The chancellor must be losing quite a bit of money in tax on interest. After all, 20% on 5% is a lot more than 20% on 1.5%.

I am also surprised that some of you like to pay tax on their interest - very odd - tells me that may be you don't have much interest on which to pay tax.

It's not that we like to do it, it's that we see it as necessary. I don't personally like paying taxes at all, but if I have to pay 20% on my income to the taxman, I see no reason why others shouldn't have to do the same for their income.

undercoat11

I pay tax on everything too, but I would certainly like to see saving encouraged more, by scrapping the 20% levy on savings' interest. My elderly father in law who is 92 is still paying 20% tax on his savings because he has a pension which takes him a few hundred pounds over the tax threshold. He isn't a wealthy man, but those that really are wealthy are probably getting away with millions in unpaid tax, whereas those with a small nest egg that they have scrimped and saved from their income over the years, are still being taxed.

tomstickland

Why tax something that has usually been taxed already?

Aegis

tomstickland wrote: »

Why tax something that has usually been taxed already?

They're not. They're taxing the income made from your savings, not the savings themselves.

tomstickland

PasturesNew wrote: »

And ... ISAs are quite complex. I have one, I'd like a 2nd but I am scared/don't really understand.... and there are too many.

Cash ISAs are very simple, they're just a glorified savings account.

posted_2

It isn't income, it's protection against inflation. Cash ISA's are far from simple, which is why providers can pay less than an equivalent simple account.

[Deleted User]

Aegis wrote: »

They're not. They're taxing the income made from your savings, not the savings themselves.

Yes, we get that! Jeeeeez:rolleyes:

The income, or interest from savings, or whatever you want to call it, should not be taxed in my opinion; ever. We pay tax when we earn money, so we shouldn't have to pay tax again when we put it in a bank. Anyone with money in a bank would agree with this (If they were being honest anyway...), but clearly some just prefer to be awkward, for the hell of it.