Tax on savings

ViolaLass

Mikeyorks wrote: »

You need to read the declaration you complete on the R85? Completing an R85 regardless doesn't fit with the rules. And as your interest provider tells HMRC they've paid you gross ..... they'll not be terribly amused if they catch you giving false information.

I fill the form in because I don't know whether I will be paying tax at the end of the year (very variable income, which may reasonably be under the tax levels). If I need to pay tax, I do. I don't see that it matters really, as long as I pay the tax by the January deadline.

notbritishgas

ViolaLass wrote: »

I fill the form in because I don't know whether I will be paying tax at the end of the year (very variable income, which may reasonably be under the tax levels). If I need to pay tax, I do. I don't see that it matters really, as long as I pay the tax by the January deadline.

I am afraid it does matter.
When you sign the R85 you declare that you are not a taxpayer. If you subsequently need to pay tax in a year then you have declared wrongly.
I found this out as I manage my wifes tax affairs and perhaps like you I try to keep her just below the £6475 allowance and she has signed a R85.
One year I miscalculated with the result she was £120 over the allowance.
About a year later she received a snotty letter from HMRC saying she was receiving gross income wrongly and should deregister.

debbie42

notbritishgas wrote: »

When you sign the R85 you declare that you are not a taxpayer. If you subsequently need to pay tax in a year then you have declared wrongly.

Not necessarily. I am not currently an income tax payer, and have, quite rightly, registered for gross interest on my savings accounts. However, my tax situation may change later in the year: I really don't know and can't predict this. I was declaring correctly at the time, but circumstances may change. Alas, I don't have a crystal ball.

juicyjude

Which is exactly what I did Debbie42. So long as you deregister when you get up to the allowance figure and are honest should be no problem. It is only wrong to complete an R85 form when you know youre going to be a tax payer.

dougs

there's a useful calculator here that works out the gross interest and the tax paid if you have the net interest received figure.

HTH

notbritishgas

debbie42 wrote: »

Not necessarily. I am not currently an income tax payer, and have, quite rightly, registered for gross interest on my savings accounts. However, my tax situation may change later in the year: I really don't know and can't predict this. I was declaring correctly at the time, but circumstances may change. Alas, I don't have a crystal ball.

I totally agree with you and juicyjude. My wife was in exactly the same situation, signed R85 expecting to be a non taxpayer for that year.
However circumstances changed slightly (or I miscalculated) and she earned £120 over the personal allowance.
As I said earlier this prompted HMRC to send a threatening letter saying she had signed R85 wrongly and should have paid tax on that interst.
Also the £120 plus a bit more was earned on accounts where she had not registered for gross interest, so she had already paid tax on that and indeed received a refund of the rest.