Advise on tax on bank interest during career break

Mikeyorks

princessdon wrote: »

Only problem was I am a regular charity donator and had donated gift aid - I never found out what happened to those and I really hope they never were penalised

If HMRC link this up - I'm afraid it is you who will be penalised. As they will require you to (re)pay the extent of the gift aid. Which is why the R40 requires you to state the level of Gift Aid.

ejv

jem16 wrote: »

Not everone is able to use the 10% tax rate and it only applies to someone with a total income of less than £10,815 and where part or all of it is interest from savings.

I think I should qualify.
All I have is my single job, ISA and savings accounts.
No share/dividends/property/benefits
I'm sure that my savings account is NOT going to generate £2710 interest.
So I think the best option for me is to send R40 in April 2013 and April 2014.
Thanx buddies:D

princessdon

Thanks Mike

I would be happy to repay - was just hoping that at the time it was GA I was paying tax. I'd rather be penalised than the charity

But what you do in April/May is another thing to what you would do in March sadly.

It was several years ago and I haven't heard.

Mikeyorks

ejv wrote: »

So I think the best option for me is to send R40 in April 2013 and April 2014.

That is definitely your best option ........... as you're not fully getting to grips with all this ?

I'm sure that my savings account is NOT going to generate £2710 interest.

Not the point :-

If your earned income exceeds (£8105 + £2710 = ) £10815 .... then the 10% savings rate simply doesn't exist for you. You pay 20% on all your interest.

If your earned income exceeds £8105 but doesn't exceed £10815 ...... then you're entitled to have only 10% tax applied to the savings interest which sits on top of your earned income and goes up to the £10815 limit. Anything that pokes out above £10815 .... is at 20%.

If your earned income is less than £8105. Then any interest which sits on top of your earned income is tax free up to the point at which it aggregates to £8105. Interest which pushes the aggregate above £8105 is at 10% ...... until it noses above £10815 when it goes back to 20% again. So any interest which sits in the range £8105 to £10815 is chargeable at only 10%

In all of the above - the interest is the top slice of your income. It sits above your earned income. Just as the 10% rate sits on top of your personal allowance. But as soon as earned income goes above the top level of the 10% rate .... the 10% rate simply disappears. It's a 'pseudo' rate - as it doesn't apply to most people. And the figures obviously relate to 12-13 only

ejv

Thanks Mike..
Very well explained. I think now I've got the grips;)
Your patience and consideration to newbies are much appreciated.:T

DreamerV

Thanks from me seconded. That's a very useful post Mikeyorks