Tax question: Does net interest from savings count as income?

jem16

Bogof_Babe wrote: »

I don't really know, she was talking to OH not me and they don't like people prompting from outside the conversation (data protection again).

No they don't - they would quite probably end the call as they may feel your husband is being prompted by you. It has been known to happen.

However what you can do is allow your husband to answer all the security checks and then he asks them to speak to you. I've done this for my sons when they were younger and receiving a pension from their late father's scheme as well as working part-time.

I'm not really sure even now how it works. Presumably he will get his whole pension paid gross now,

It will be paid gross if his pension is under £6475. Unfortunately if it is much under this then he is wasting his personal allowance by having the code attached to his pension and will overpay tax.

but they wouldn't know how much to tax him on his earnings as he has other income (the pension), so maybe they have to take 20% off it and sort out any rebate at the end of the year.

With the full code attached to his pension they will give the salary income BR as a tax code. He should have told them that he has a pension and is working and exactly what the amounts are. If he earns over £6475 then the tax code should be on his job and the pension has BR. That's how mine works.

If they put him onto that 647L code what effect would that have on his pay?

If you mean put the tax code of 647L on his job he would pay less tax and have more take home pay.

Bogof_Babe

Hmm. His basic contract is just 10 hours a week so well under the £6475, but he does a lot of overtime. He started working in that job last June, and his current summary shows that he has earned £4453 to date, and paid £890 tax on it. There's still a few weeks to go until close of play but he won't bump it up to £6475 in that time.

His gross pension to date is £3617 and he's paid £723 tax on it. When we get the refund we can always contact them again I suppose if it doesn't seem right, or if ongoing he seems not to be getting his rightful tax allowance.

Why can't they put the same 647L tax code on both things? Does one of them have to be BR? (Sorry for all the questions ).

jem16

Bogof_Babe wrote: »

Hmm. His basic contract is just 10 hours a week so well under the £6475, but he does a lot of overtime. He started working in that job last June, and his current summary shows that he has earned £4453 to date, and paid £890 tax on it. There's still a few weeks to go until close of play but he won't bump it up to £6475 in that time.

It would be more with next year in mind if he plans to be there for a whole year.

His gross pension to date is £3617 and he's paid £723 tax on it. When we get the refund we can always contact them again I suppose if it doesn't seem right, or if ongoing he seems not to be getting his rightful tax allowance.

If the code of 647L is being applied to this pension he will only use up around half of his allowances.

Why can't they put the same 647L tax code on both things? Does one of them have to be BR? (Sorry for all the questions ).

You can't apply 647L to both income sources as you would then get the full personall allowance on both and therefore pay too little tax.

What could be done is to split the personal allowance and give 361T(although it would be higher as £3671 is not the full year amount for his pension) to his pension and 286T to his job. In other words split the 647L up according to the expected income on both. You need to ask HMRC to do this.

anamenottaken

Bogof_Babe wrote: »

Hmm. His basic contract is just 10 hours a week so well under the £6475, but he does a lot of overtime. He started working in that job last June, and his current summary shows that he has earned £4453 to date, and paid £890 tax on it. There's still a few weeks to go until close of play but he won't bump it up to £6475 in that time.

His gross pension to date is £3617 and he's paid £723 tax on it. When we get the refund we can always contact them again I suppose if it doesn't seem right, or if ongoing he seems not to be getting his rightful tax allowance.

Why can't they put the same 647L tax code on both things? Does one of them have to be BR? (Sorry for all the questions ).

They couldn't put 647L on both because that way he would get double the personal allowance!

They can split it though - which would mean that, overall, he would receive the full allowance, just over two income streams rather than one.

Bogof_Babe

jem16 wrote: »

What could be done is to split the personal allowance and give 361T(although it would be higher as £3671 is not the full year amount for his pension) to his pension and 286T to his job. In other words split the 647L up according to the expected income on both. You need to ask HMRC to do this.

Now that sounds like a plan. We will need to get this sorted for next tax year, even if it is all a bit messy for what's left of this one.

jem16

Bogof_Babe wrote: »

Now that sounds like a plan. We will need to get this sorted for next tax year, even if it is all a bit messy for what's left of this one.

Good luck then.

Just to complicate things a little further - when does he turn 65?

Bogof_Babe

jem16 wrote: »

Good luck then.

Just to complicate things a little further - when does he turn 65?

Sorry for the late reply, we've been out for the night (celebrating my birthday which is tomorrow, since we're talking birthdays lol).

He'll be 65 in June 2011, so has another full year to work, assuming he can keep this little part time job.

jem16

Bogof_Babe wrote: »

Sorry for the late reply, we've been out for the night (celebrating my birthday which is tomorrow, since we're talking birthdays lol).

Happy Birthday!

He'll be 65 in June 2011, so has another full year to work, assuming he can keep this little part time job.

Was more thinking about when he would be able to claim the higher personal alliowance. If he had been 65 on April 5th 2011 or before he would have been able to claim his higher personal allowance as from 6th April 2010 so it was important to know.

Bogof_Babe

jem16 wrote: »

Was more thinking about when he would be able to claim the higher personal alliowance. If he had been 65 on April 5th 2011 or before he would have been able to claim his higher personal allowance as from 6th April 2010 so it was important to know.

Drat, foiled again .

Ah well, it's only money .