Have I made a big mistake?

maryhaggie

My first post many apologies if it is not in the right place, I would be grateful for advice on joint savings.
My husband and I are retired late 60's/70's, he pays tax I don't. Each year I claim tax back on my half of savings income, it's nice to have a lump sum to buy something with!
I was told we were wasting money and we should transfer the savings into my name only, which is what I did last year.
I submitted my claim this year expecting a few hundred pounds refund in fact I got nothing -no tax refund was due. (they didn't even have the courtesy to let me know, I had to ring up and ask what had happened to my claim.)
basically I would be grateful if someone can tell me what I have done wrong and should we transfer to joint accounts again.

many many thanks

Mary
xxx

CLAPTON

what are the facts

when was the money transferred to your accounts
how much money is there saved
how much interest wa paid in the tax year
did you complete R85 so you received the interest gross
what is your other income?

maryhaggie

Clapton, thanks for your interest - my income is small state pension and works pension total under £4000 per year.- - plus interest from savings.
my tax code after deduction for state pension is 657P

We had joint savings of around £75,000 in 2 joint coventry bs accounts, and transferred into my name only around last May.
The interest I received from this and other savings was around 3,300, which seems within my tax allowance so I assumed that I would get around £600 tax rebate when I applied on form R40. None of our tax is deducted at source I always claim it back each year since I retired 8 years ago and have received around £300 normally, so can't understand why this would change but must be missing something obvious?
again thank you

Mary
xx

xylophone

http://www.hmrc.gov.uk/tdsi/ten-per-cent-guidance.htm -the figures used in the examples are out of date so see http://www.hmrc.gov.uk/rates/it.htm

Input your own tax allowance and figures and see how it works out.

jennifernil

maryhaggie wrote: »

Clapton, thanks for your interest - my income is small state pension and works pension total under £4000 per year.- - plus interest from savings.
my tax code after deduction for state pension is 657P

We had joint savings of around £75,000 in 2 joint coventry bs accounts, and transferred into my name only around last May.
The interest I received from this and other savings was around 3,300, which seems within my tax allowance so I assumed that I would get around £600 tax rebate when I applied on form R40. None of our tax is deducted at source I always claim it back each year since I retired 8 years ago and have received around £300 normally, so can't understand why this would change but must be missing something obvious?
again thank you

Mary
xx

What you have done sounds fine, we do similar as my pension is only about £3k in total. Other than ISAs, everything is in my name and I never pay any tax on the interest as I am still below my personal allowance. Even if I went slightly over, I would still qualify for the 10% rate.

I think you need to look at a few things like when the interest was paid and when you transferred the accounts, relative to the tax year.

When you transfered them, did you not register for gross interest? What do your tax certificates say regarding any tax deductions?

Your statement......"none of our tax is deducted at source"........is also confusing.

maryhaggie

thank you jennifernil and xylophone for the helpful advice. I just meant that for any interest we receive, tax is deducted at source and in April each year I submit a request for refund and it has worked for the last 8 years since I retired, I may be wrong but it's nice to have a lump sum each summer to buy something with instead of the interest just added to savings accounts - but as you may have gathered I'm not really clued up beyond the basics.
I'm not really sure when the interest goes into our account at the Coventry, around May I think, they send a statement each year detailing gross/net and tax deducted.

thanks again

Mary
xx

CLAPTON

it would be easier if you were more precise e.g 'last May' is unclear

when did you transfer the money into your own name?
when was interest actually paid?
what exactly did you write on the R40?

jennifernil

Have you had the Tax Certificate for the year in question? This is presumably tax year 11/12?

If so, it will tell you if any tax was actually deducted.

The tax liability is based on when the interest is actually paid.

Did you close the joint accounts and start new sole ones? If so, then interest to closure would be added and be liable to tax on your husbands share. You would be able to reclaim the tax on your share.

Sometimes you can just alter the name(s) on an account, so there would only be interest paid at the regular time and tax would depend on whose name was on the account.

You do need to dig out your paperwork and study the detail.

You really should register all your accounts for gross interest, if you haven't already done so. It saves the hassle of reclaiming and you get the full amount in the account immediately. No point in letting HMRC have it even for a short time!

It also makes less work for HMRC, who seem to be understaffed, so not having to handle your reclaim will free up a few minutes of their time.

I understand what you mean by getting the "lump sum", but I don't agree with your opinion. Interest is usually compounded, so the sooner the full amount is credited to your account, the better.

Many banks/building societies do allow joint accounts to be registered for gross interest and will pay half the interest taxed and half gross. But for best tax efficiency you are doing the right thing in keeping the savings in your name.

maryhaggie

Apologies for late reply, just got back from Hosp appt. Many thanks for the good advice!
All I did was contact the Coventry and they sent me a form to remove my husband's name from the accounts, they weren't closed or anything as they were fixed term bonds, they are deposits for a year at a time, this was done end of April, beginning of May 2011. Interest was paid on one account on 31st of August 2011 , on the other account at the end of April 2011.
Basically I'm just asking if there is some reason why I'm entitled to no tax refund at all when nothing has changed except my husband's name has been removed from 2 accounts ( in fact it was removed from one of them too late for it to be effective for 2011 -2012 tax year so only one account is so far involved - the one where tax was deducted in August 2011)
I'm wondering if it would be a good idea to go into my local tax office in Newcastle, although the R40 was sent to Liverpool, it's hopeless trying to get through on the phone as costs 10 p per minute while you're waiting.
I did manage to get through to someone after 7 pm but she said all she could do was send an email to the dept and I couldn't talk to whoever disallowed me direct, very frustrating - Maybe I need Jimmy Carr's tax adviser!

thanks again

Mary
xxx

jennifernil

No, I don't see any reason why you would not be entitled to a refund if you have paid tax when you did not need to.

What was your total income in the year 11/12, and how much tax was deducted? If you don't mind giving this, someone will check the figures for you.

Did you get a tax certificate for each of your accounts stating how much tax was deducted?

Is it possible you filled in the R40 incorrectly? It can be confusing and you need to be sure you put the figures in the correct boxes.

If everything checks out, then you do need to either write to them again, or possibly ask your local tax office if they can advise.

When you rang to find out the progress of your reclaim, what reason did they give for there being no refund due?

maryhaggie

thank you jennifernil, yes I get tax certs from all savings accounts and up to now have had no probs claiming it back have done this for many years, my income last tax year was under 5000, I only have a small works pension and my old age pension, and my personal allowance speaking from memory is over £10,000. I have had tax deducted of over £600 on interest of over £3300 so was hoping to get that back!

Mary
xxx