83 yr old - tax on savings?? help!

Therese1

My 83 yr old Grandmother has about £22,000 in various savings accounts - £13k in a 2 year bond, £5k in a cash isa and about £4k in her current account (!)

We keep trying to get her to spend it to make her life a bit easier - taxi instead of bus, get a cleaner etc but she'll take some convincing.

In the meantime, what are her tax liabilities?? Is she "over" any thresholds for paying tax? As far as I know she just gets the basic pension and she gets an allowance for being registered blind.

Do we/she need to declare her savings to the tax man or does it get worked out automatically via the bank/pension folk?

sorry, we are all a bit naive on this one!

thanks for your help

atush

We don't know, only you know her exact income and her allowances. If she earns less than her allowance incl the interest (she will have a larger one if Blind I think) then she should register for gross interest.

If she pays tax, move mroe money into Cash ISAs as these are tax free. Whatever you do, get that 4Kout of current acct and earning. And maybe get her to give you power of attny so you can get things done to her house, and even hrie a car service for her (say once a week to the shops) at a set rate?

Therese1

Ah, so the tax is worked out on her income rather than her savings? We were thinking she had "too much" stashed and this was going to tip her over. Will check out her income, where do I go to see what the limits are?

Yes, I agree re the £4k but she is taking some convincing "but I might need it for something"! - she seems to think by putting it into a savings she is locking it away - working on that one!

We generally do her bulk shopping between us - but she does like to go herself sometimes too - via the freezing bus stop!! I do "meals on wheels" for her - maybe I should charge (no way!!)

thanks for your help - I might be back!:)

atush

It will if her income includes means tested benefits? Does she get means tedted, or is she just relying on normal benefits such as SP, winter fuel, and the extra she gets for sight?

If her income is all opensions and savings income, then no.

bengal-stripe

atush wrote: »

It will if her income includes means tested benefits?

If she gets Pension Credit, she probably will be on an "Assessed Income Period", which at her age would be 'Indefinite'. In this case, she could have any amount of savings, without affecting means-tested benefits (housing, council tax).

It is impossible to give correct answers, without having more information about the financial situation in total.

xylophone

What is your grandmother's tax code? http://www.hmrc.gov.uk/rates/it.htm
Or by allowance do you mean something other than the Blind Persons Allowance covered here http://www.hmrc.gov.uk/incometax/blind-person-allow.htm
See also http://www.hmrc.gov.uk/tdsi/ten-per-cent-guidance.htm

alanq

It is not simply a matter of does she have to pay tax or not. She may have to pay tax on part of her interest+pension in which case she cannot register to have any of her interest paid gross. She may only owe 10% on some or all of that income.

Most bank and building society accounts pay interest with 20% tax deducted. If Gran has overpaid, the overpayment can be claimed back with an R40 form which can be found online. Claims can be made back to 2006-2007. If overpayment has been occurring hurry up and claim before March 31st because after that date a claim will only be possible back to 2007-2008 tax year.

http://www.hmrc.gov.uk/incometax/tax-free-interest.htm

jennifernil

Therese1 wrote: »

Ah, so the tax is worked out on her income rather than her savings? We were thinking she had "too much" stashed and this was going to tip her over. Will check out her income, where do I go to see what the limits are?

Yes, I agree re the £4k but she is taking some convincing "but I might need it for something"! - she seems to think by putting it into a savings she is locking it away - working on that one!

We generally do her bulk shopping between us - but she does like to go herself sometimes too - via the freezing bus stop!! I do "meals on wheels" for her - maybe I should charge (no way!!)

thanks for your help - I might be back!:)

Good basic info here, worth reading, and worth exploring the links to the various pages......

http://www.hmrc.gov.uk/incometax/basics.htm

oldvicar

alanq wrote: »

Claims can be made back to 2006-2007. If overpayment has been occurring hurry up and claim before March 31st because after that date a claim will only be possible back to 2007-2008 tax year.

http://www.hmrc.gov.uk/incometax/tax-free-interest.htm

And a few days later, 5 April, is the deadline for claims for 2007-08. After that claims can only go back to 2008-09.

Eco_Miser

atush wrote: »

Whatever you do, get that 4Kout of current acct and earning.

Unless it happens to be a Lloyds TSB Vantage account with at least £1000 being paid into it every month - in which case it will be earning 3%.

goodanna

thanks for your help - I might be back!