Savings Q

MonstersMummy

Hi,
I've just been reading through MArtins articles on savings, getting ready for my debt free date next year but am slightly confused.
Its mainly about ISAs but would probably affect all savings.
I dont work, I spend my life looking after the sprogs, so dont pay tax on earnings as I dont have any!
How would this effect my savings? Would I pay tax on them at standard rate, higher rate or not pay tax at all?
Does anyone know?
Thanks.

tom188

Provided you earn less than 5035pa you are a non tax payer and will not be taxed on your interest.

If you are considering returning to work an ISA will have long term tax advantages.

Register for your interest to be paid gross by filling in an R85 form.

Mikeyorks

If it's 'mainly about ISAs' .... then you're worrying unnecessarily ... as the core essence is that ISAs are tax free in any event?

The rest of any savings will normally have tax deducted at 20% from any interest that's paid. But you can avoid this, if your income is below your personal allowance (£5035 this year - and index linked so inflates every April) .. by filing an R85 for each account you have (includes current accounts). That enables your provider to pay the interest 'gross'. Some Banks / BS - don't accept paper copies of the R85, and you just need to phone them / instruct them in a Branch.

If you have existing savings ... that applies now. Some banks etc will apply the R85 retrospectively to any interst paid since 6th Apr 06 - and gross it up. Some will only apply it from the current date - and you'd have to apply to HMRC (after 5th Apr 07) for the tax back - on a form R40. And you can equally (R40) apply to HMRC for any overdeducted tax for the previous 5 years - provided your circumstances were the same throughout that period.