Taxation query

ds1791

Hi, No doubt this is a simple question for you highly knowledgeable peeps.

We have savings which are held in the wife's name as she is currently a non tax payer. The interest returned from these savings at the moment is below the 'Personal Allowance' for an individual. With the accounts she has always filled in the R85 to declare as a non tax payer.

We cream the interest off earned and use this to pay into our Cash ISA's each year.

But, if the return of interest with the sum(s) deposited took the wife beyond the personal allowance does this really mean she has effectively become a tax payer and would this have the knock on effect in the fact she could not claim as a non tax payer and so earn a net rate not gross?

Thanks.

xylophone

If you mean that the interest earned takes her over the personal allowance then she cannot complete R85.

However, she may still be owed a tax refund (which she would have to reclaim using R40) because of the 10% tax band on savings income.

See http://www.hmrc.gov.uk/tdsi/ten-per-cent-guidance.htm

The tax bands used in the examples belong to a previous year so input the figures using http://www.hmrc.gov.uk/rates/it.htm

ds1791

Thanks xylophone, Yes that was what I was trying to get to, where the interest earned takes her over the personal allowance then confirming this cancels the R85 and so we would only earn net interest on the savings and not gross.

Thanks again.