Tax on savings

beatsneedrhymes

I have recently quit my job with a view to going travelling. Quick questio: as I am unemployed, will I still be paying tax on the interest my savings will be accruing (when I sort them out)? The online calculators on this site always give you an option of 'no tax' - is that for non-earners like I currently am?

Thanks in advance!

Lokolo

You need to inform your banks you are not longer a taxpayer and interest will be paid without tax.

withnell

You're only a non taxpayer if you'll earn less in the tax year than the allowance (~6k)

As it's a new tax year then I'd guess you will be a non tax payer unless you have significant savings/investment income

bunny71

Lokolo wrote: »

You need to inform your banks you are not longer a taxpayer and interest will be paid without tax.

Yes, you'll be asked to complete an R85 form. Once the bank have that returned and complete, they forward it on to the Inland Revenue. You'll then have interest paid gross. When you start earning enough to pay tax again, you'll need to inform the bank so they can remove the R85 and pay your interest net.

juicyjude

And the personal tax allowance has just gone up from 6th April 09. If you are under 65 and your interest is less than £6500 pa you can claim gross interest.

opinions4u

juicyjude wrote: »

And the personal tax allowance has just gone up from 6th April 09. If you are under 65 and your interest is less than £6500 pa you can claim gross interest.

I must be losing it - I missed that!

http://www.hmrc.gov.uk/rates/it.htm

£6,475 in interest and other income - so if you travel for 6 months and expect to come back and earn more than £6,4475 in total before the end of the tax year you shouldn't sign the R85.

juicyjude

I have an investment from the Pru which starts to pay interest out to my account this month. As it is coming out of the capital atm and the interest total is only 5% of the total capital I have been told that it is not subject to tax is this correct