do i want gross or net interest?

kittykate_2

HI
I just looked at my application for a savings account with hsbc and it's asking whether I want my interest paid gross or net. Which do I want? I have no clue what these mean, I tried to read it but I just couldn't concentrate on it. I don't get this financial stuff.

KKx

dunstonh

Are you a non taxpayer (gross) or taxpayer (net)?

kittykate_2

I pay tax from my job if thats what you mean?

ReportInvestor

If you are a basic rate taxpayer then it is easier to have your interest paid net, with the basic rate savings tax of 20% automatically deducted for you.

Otherwise you will have to fill out a tax form and then your head will really hurt .

kittykate_2

Aaah right, thanks Wonder why it doesn't just say that. It doesn't explain itself.

Thanks guys

Now I can open my first ever savings account. I'm going to put £50 in. I feel so good about it.

KKx

edit: hang on a minute. If I save this money they are going to take 20% of it away from me just for saving it?

ReportInvestor

20% of the interest you will earn.

Not your capital (that's the money you are saving).

kittykate_2

ReportInvestor wrote:

20% of the interest you will earn.

Not your capital.

Aaah right. I thought they were going to take all my savings away then. Lol, you can so tell I'm a newbie at saving.

Thanks again!

KKx

sarahlouise210

ReportInvestor wrote:

If you are a basic rate taxpayer then it is easier to have your interest paid net, with the basic rate savings tax of 20% automatically deducted for you.

Otherwise you will have to fill out a tax form and then your head will really hurt .

You do not have a choice..... if you pay tax then you MUST tick the box to ensure you have your interest paid NET if its from a source that gives you a choice. If you dont pay tax when you take out a savings account..but at a later date start to pay tax ..then you must inform your bank/BS that you want to de-register from gross interest payments.

ReportInvestor

That's true.

But if you make a mistake [people obviously do] you will not be executed by Hector , although the Revenue may mark your card, fine you and make you fill in a tax form.

If you have made a mistake, it is almost certainly best to contact the Revenue before they contact you.