Just Gone To 40% Tax Level

gadgetmind

guitarman001 wrote: »

gadgetmind - perhaps too personal but how does she do that? Makes use of ISAs etc?? You don't have to answer!! Help appreciated in any case

Interest income is less than personal allowance, so no tax.

Dividend income has no more tax for basic rate tax payers, so tax.

For capital gains, you subtract your CGT allowance, and then "stack" further gains on top of interest income and dividend income. You then apply tax at 18%.

Your final tax figure depends on the interest+dividend+CG split and I was giving her rough figure for this tax year.

guitarman001

Nice one!
Thanks for all that everybody - much appreciated!

evenasus

guitarman001 wrote: »

Hmm, my girlfriend doesn't earn all that much - I think she may actually be below the main tax band. Does this mean she should get some sort of rebate on the 20% interest knocked off her savings?

For this financial year, your girlfriend can earn up to £8,105- this includes savings interest.

If she earns below that amount, then she can claim the tax back she paid on any interest paid - up to the £8,105 of course.

guitarman001

Great - I've e-mailed her saying as much. Honestly never realised that.

opinions4u

evenasus wrote: »

For this financial year, your girlfriend can earn up to £8,105- this includes savings interest.

If she earns below that amount, then she can claim the tax back she paid on any interest paid - up to the £8,105 of course.

There's also the 10% rate on savings interest in certain circumstances too!

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

guitarman001

Similarly, I made a loss of about £7k last year on shares. Could I offset this against my taxable income in order to get some sort of a tax rebate!?

oldvicar

gadgetmind wrote: »

Interest income is less than personal allowance, so no tax.

Dividend income has no more tax for basic rate tax payers, so tax.

For capital gains, you subtract your CGT allowance, and then "stack" further gains on top of interest income and dividend income. You then apply tax at 18%.

Your final tax figure depends on the interest+dividend+CG split and I was giving her rough figure for this tax year.

evenasus wrote: »

For this financial year, your girlfriend can earn up to £8,105- this includes savings interest.

If she earns below that amount, then she can claim the tax back she paid on any interest paid - up to the £8,105 of course.

And then of course there is the wonderful 10% tax band for "starting rate for savings interest" on the approx £2300-odd band on top of the tax free £8105 personal allowance

As long as your earnings (from work etc) are under the personal allowance, of £8105, then if your savings interest takes you above this level then the next the £2300-odd is taxable at only 10% rather than 20%. If this applies, then you have to re-claim some of the 20% tax deducted by banks etc from HMRC.

oldvicar

guitarman001 wrote: »

Similarly, I made a loss of about £7k last year on shares. Could I offset this against my taxable income in order to get some sort of a tax rebate!?

No. But if you made an overall capital loss for the year (gains less losses made in the same year), then the loss for the year can be carried forward, and used as an extra allowance for a 'good' year where your capital gains are above the CGT allowance.

Gromitt

guitarman001: I know someone who entered the 40% tax bracket and didn't bother to tell HMRC anything, assuming it was all taken care of by the company he worked for. A year later, he received an ugly letter from HMRC threatening penalties and interest on the penalties if not paid. I believe he decided to have his tax code changed.

oldvicar

Although it is legally the taxpayer's responsibility to tell HMRC if they owe more tax, HMRC know what people earn under PAYE, they know of any non-trivial interest earned, etc, and therefore a lot of the time they will take the initiative and write to the taxpayer asking them to complete a tax return