Tax advice please

jem16

shelleyelm wrote: »

I was wandering if anyone has any advice for me? 3 times the tax office attempted to take payments from my husbands account even though he did not owe them any money he informed them each time of the mistake. The problem being that his bank closed his account because of the actions of the hmrc and he now has bad credit rating can we claim compensation and how much are we likely to receive?

Please start your own thread by clicking New Thread rather than adding your query onto the end of this thread.

That way you will get more help and the OP's question will not get confusing answers.

Steve_xx

Mikeyorks wrote: »

The clue is in what I posted above :


..... if someone's earned income (as is the case in your Example 24) exceeds the band formed by (PA + £2320) ........... then the 10% band does not exist for them. It purely exists where your Savings interest hits PA + £2320.

I've described it in the past as a 'pseudo band' ...... because it doesn't actually exist for most people. Which is quite contrary to the 10% tax band (which was removed, but which also facilitated people such as your relative reclaiming some interest at 10%). Because if you exceeded your PA - you always progressed up the tax scale via that 10% tax band.

But you do not touch the 10% savings band ..... unless your interest hits the PA + £2320 gap. Trust that's helpful? It's actually straightforward once you get your head around it.

But deep in the Treasury annals I found something, last year, that described this as 'simplification'! Which it clearly isn't ....... either for HMRC or their customers.

Thanks for that. I've got a grip on it now and understand how the 10%rate might be applied. Looking at Uncle's case here it seems to me that as he earned a gross amount of 12k interest on his savings, he wont be able to reclaim anything using the 10% rate. But he may be able to claim something back because his pension doesn't take up all of the basic allowance of £6035?

jem16

Steve_xx wrote: »

Thanks for that. I've got a grip on it now and understand how the 10%rate might be applied. Looking at Uncle's case here it seems to me that as he earned a gross amount of 12k interest on his savings, he wont be able to reclaim anything using the 10% rate. But he may be able to claim something back because his pension doesn't take up all of the basic allowance of £6035?

No.

As has been said quite a few times so far your uncle will be able to claim back 20% on the part of his savings that don't use up his personal allowance.

He will also be able to claim back 10% of the £2320 savings band allowance.

Earned income is income from a job or a pension. In your uncle's case this is only £5300. Everything else is savings income. So the 10% band does apply.

Bothe trevormax and myself have calculated that your uncle will have a rebate of approximately £379.

Steve_xx

jem16 wrote: »

Because Deryn (she not he) earns £20,000 which is way above the personal allowance of £6035.

The 10% band only applies if you have earned income less than your personal allowance or the personal allowance plus the 10% band.

Thanks for the clarification - I've think |I'm understanding how it functions now.

jem16

Steve_xx wrote: »

Thanks for the clarification - I've think |I'm understanding how it functions now.

You haven't grasped it yet if post 23 is anything to go by.

Read my post 24 for further clarification.

Mikeyorks

Steve_xx wrote: »

Thanks for that. I've got a grip on it now and understand how the 10%rate might be applied. Looking at Uncle's case here it seems to me that as he earned a gross amount of 12k interest on his savings, he wont be able to reclaim anything using the 10% rate. But he may be able to claim something back because his pension doesn't take up all of the basic allowance of £6035?

As Jem says ..... no, that isn't right. You're not distinguishing between 'earned income' (his pension) and Interest ..... which is crucial to this.

Look at my post #16 which shows the component parts of the potential refund :

Residue of personal allowance (£6035 - £5300) = £735 @ 20% = £147
Savings interest band wholly utilised at 10% = £2320 @ 10% = £232
Overpaid and refundable = £379

...... the unused portion of the PA means that £735 of the interest shouldn't be taxed at all. That gives you £147 back. Then the whole of the 10% allowance comes into play (as the whole of the PA + £2320 band aligns against interest) .... giving a further £2320 @ 10% = £232 refund (total refund £147 = £232 = £379).

If you don't concede 'Eureka' now ..... we're all going to have to meet up at Jem's for tea and sort it out over a flip chart! And ..... being a sound Scottish girl ..... we'll resort to the whisky (and she and I will do the R40) if that fails!

jem16

Mikeyorks wrote: »

If you don't concede 'Eureka' now ..... we're all going to have to meet up at Jem's for tea and sort it out over a flip chart!

I'm up for that!

And ..... being a sound Scottish girl ..... we'll resort to the whisky (and she and I will do the R40) if that fails!

I think the way this thread's been going it might come down to that.

Steve_xx

Mikeyorks wrote: »

As Jem says ..... no, that isn't right. You're not distinguishing between 'earned income' (his pension) and Interest ..... which is crucial to this.

Look at my post #16 which shows the component parts of the potential refund :



...... the unused portion of the PA means that £735 of the interest shouldn't be taxed at all. That gives you £147 back. Then the whole of the 10% allowance comes into play (as the whole of the PA + £2320 band aligns against interest) .... giving a further £2320 @ 10% = £232 refund (total refund £147 = £232 = £379).

If you don't concede 'Eureka' now ..... we're all going to have to meet up at Jem's for tea and sort it out over a flip chart! And ..... being a sound Scottish girl ..... we'll resort to the whisky (and she and I will do the R40) if that fails!

I thought I was distinguishing between pension and interest earnings, but maybe I wasn't distinguishing in the right way.

Tell me, if his pension was £5300 and his interest on his savings was say £17k before tax, how would that stack up and would he still be entitled to take advantage of the 10% savings rate?

Steve_xx

jem16 wrote: »

I'm up for that!



I think the way this thread's been going it might come down to that.

Sorry about this - one minute I think I've got it and the next minute I learn something else that causes me to doubt what I thought I'd learned!

Thanks for your help with this, it's much appreciated.

jem16

Steve_xx wrote: »

Tell me, if his pension was £5300 and his interest on his savings was say £17k before tax, how would that stack up and would he still be entitled to take advantage of the 10% savings rate?

Yes he would. If his pension was £5300 and his savings interst was £1m he would still be entitled to the 10% band.

Earned income comes from a job or a pension.

Savings income is interest from savings and is not earned income.