confused with savings tax

hebron

Hi,
I am on Incapacity benefit at the high rate and I have been claiming my saving tax as gross. I will shortly be lucky to have a little bit of money that has been left me coming my way. How do I work out my tax situation? Do I wait to the new tax year and add it all up and then change to net tax if I am over or do I work it out when I receive the money? Some of my accounts are yearly some are monthly and some pay interest not at the end of the financial year but the date I opened the account.

I am confused! Where do I start please?

Thanks for any advice.

jem16

You should work out as soon as you receive this money if it is going to make you become a taxpayer. If so you should notify the bank right away.

Try making a note of all the interest coming in and when it comes in. You should be able to work out what interest you will receive between now and 5th April 10.

Masomnia

Am I reading that right that you're inheriting the money?

I don't think that money makes you liable for income tax, so you should be able to continue recieving your interest gross. Wait for someone to confirm it though!

Aegis

Masomnia wrote: »

Am I reading that right that you're inheriting the money?

I don't think that money makes you liable for income tax, so you should be able to continue recieving your interest gross. Wait for someone to confirm it though!

The lump sum itself doesn't count as income, but the interest paid on it might push the total into tax-paying territory if it's a sizeable amount.

jack_spratt_2

The current Personal allowance for a person under 65 is £6,475

This means as long as your income is below this figure you should not be liable for tax !!
Ignore ISAs and any other tax free savings also if you are married and the accounts are in joint names half the amount of interest paid in this tax year and only use interest that has been added in this tax year .
If your interest has been paid gross and at the end of the tax year your income including interest and benefit is higher than your tax free allowance you will have to pay tax.
You will then after the 5th April 2010 contact the tax office and fill in a tax form .

I believe that if your income is above your personal rate you are charged a tax rate of 10% for the next £2,440 over your personal allowance if this income is just from savings

I am a bit rusty but think it still works like that

derrick

hebron wrote: »

Hi,
I am on Incapacity benefit at the high rate and I have been claiming my saving tax as gross. I will shortly be lucky to have a little bit of money that has been left me coming my way. How do I work out my tax situation? Do I wait to the new tax year and add it all up and then change to net tax if I am over or do I work it out when I receive the money? Some of my accounts are yearly some are monthly and some pay interest not at the end of the financial year but the date I opened the account.

I am confused! Where do I start please?

Thanks for any advice.

This page from the HMRC website might help, click on the example links at the bottom of the page.



.

hebron

Masomnia wrote: »

Am I reading that right that you're inheriting the money?

Yes this money is inherited money.

My money will be made up of
Incapacity benefit of £4650 per annum + I have about 8 accounts all paying different interest and at different times of the year and a couple of those are joint accounts.
With an average taken of the interest + my benefits I would be in the region of the £6475 a year mark. I might be under and I might be slightly over.

Do I have to guess the interest I'm going to receive on the current interest rates at the moment paid to that particular account or how do I go about working it out please?

Thanks for all your replies.

jem16

I assume your Incapacity benfit is taxable? IB paid befiore 1995 isn't taxable.

As to interest if the account pays 3% then calculate 3/100ths of the amount saved.

If you are borderline I would probably leave things as they are and calculate it at the end of the tax year.

Lansdowne

The interest is always counted in the year when it arrives in your account, even if it was earned over two years for example.

hebron

jem16 wrote: »

I assume your Incapacity benfit is taxable? IB paid befiore 1995 isn't taxable.

As to interest if the account pays 3% then calculate 3/100ths of the amount saved.

If you are borderline I would probably leave things as they are and calculate it at the end of the tax year.

Why is it 3/100ths please.

KingL

3% interest rate is 0.03 or 3/100ths when you start doing maths with it.