Help for elderly dad re tax/savings please

dotchas

Hi,
I am trying to ensure my Dad (85) is making the most of his savings and pension.
As far as I can see he gets £420 p/m company pension and £94 p/w old age pension.Total approx £796 p/m
I have opened a web saver with the halifax for him .He does not want to change banks or tie his money up at his time of life!
My question is about tax ,will I have to notify them ?
Or with his income ,should he pay tax??

Any advice please ,
Dot

DavidHM

I make that income of (£94 × 52) + (£420 × 12) = £9,928.

http://listentotaxman.com suggests he should be a basic rate taxpayer with
a total taxable income of £2,508, most of which is taxed at 10% (around £2k) with the remainder at 22%. This gives him a total tax liability for the year (excluding any other interest) of £294 pa.

He should therefore pay tax on interest at 20%, which is the amount that is automatically deducted at source. Therefore the bank will automatically deal with his tax position without you (or him) having to do anything - unless of course his savings are huge and he has more than £31,000 in interest income that you haven't mentioned!

However he may be better off with money in a mini-cash ISA without a notice period as this is not taxed at all. If he has more than £3,000 he can pay £3k in immediately and another £3k after 5 April. On his income it is unlikely he will want to save more than £3k over a year in any event and so there is no harm in him paying money into the ISA and then withdrawing it in any event.

dotchas

Hi,

Thanks for the info!
I will look into an ISA for him,it was the tax bit I wasn't sure of but as they are Tax -free.
He has approx £8000 savings so can we put in £3000 this year and another £3000 after April?

Thanks again
Dot

Heinz

dotchas wrote:

I will look into an ISA for him,it was the tax bit I wasn't sure of but as they are Tax -free.
He has approx £8000 savings so can we put in £3000 this year and another £3000 after April?

Yes, that's the benefit of being near the tax year end in this case.

If he's not put any money into a mini cash ISA in the current tax year, put £3000 in one now and £3000 more into it (or into another ISA if he wants) after 6/4/07.

dotchas

Thanks,
Will do that,

Cheers:beer:
Dot

Isn't this site wonderful ,so much information!