10% Savings Tax

Pineapple88

Hi guys first time posting here so please be gentle

I've been told that I may be able to claim back some tax on my savings from last tax year so that I only pay 10% tax. It's not much but every little helps! I've been trying to work it out using the HMRC website but it's making my head spin!

Would anyone be able to give me an idea of whether I am able to claim anything back please?

The figures:
Earnings from employment last year: £8862. Tax code was 747L.

Interest on savings: £220 gross. Taxed at 20%.
Repayment on capital from national savings certificates: £270 plus some interest. Should these figures be included?

I also have an isa. Am i right in thinking that interest from this is not included in calculation?

Thanks in advance for any help :beer:

pjclar02

Hi there

Unfortunately, your income level is toohigh for the savings rate of 10% to be applied. If you had no employment income you could claim the lower rate. As it stands, 20% tax on your savings appears to be the correct rate.

Best wishes

Pineapple88

Thanks for the reply.

I thought that you could have the 10% tax on savings applied if you earned over the personal allowance but did not exceed the starting rate for savings of £2320.

There is an example on the HMRC website mabye someone could post the link for me since as a newbie I am not allowed.

Its on HMRC website under 'Guidance on the 10 per cent starting rate for 'savings income''. There is an example showing a scenario of someone who has earned more than the personal allowance but not exceeded the savings allowance of £2320.

chrisbur

Pineapple88 wrote: »

Thanks for the reply.

I thought that you could have the 10% tax on savings applied if you earned over the personal allowance but did not exceed the starting rate for savings of £2320.

There is an example on the HMRC website mabye someone could post the link for me since as a newbie I am not allowed.

Its on HMRC website under 'Guidance on the 10 per cent starting rate for 'savings income''. There is an example showing a scenario of someone who has earned more than the personal allowance but not exceeded the savings allowance of £2320.

Link to example 25 which covers your situation....
http://www.hmrc.gov.uk/tdsi/example25.htm
I would say you are due back half of the tax on savings interest. ISAs can be ignored but no idea what happens about the National Savings Certificates.

dzug1

You are able to claim the excess tax back as your total income is less than £2320 above your personal allowance

Savings Certificates and ISAs can be ignored - both are tax free investments.

xylophone

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

Pineapple88

Thanks for the replies. It looks like I will be able to claim a little bit back then :j

I've had a look at the examples before posting but I just couldn't follow the calculation. I think I better given HMRC a ring before sending of the forms to check that I'm doing them right.

antonic

Pineapple88 wrote: »

Hi guys first time posting here so please be gentle

I've been told that I may be able to claim back some tax on my savings from last tax year so that I only pay 10% tax. It's not much but every little helps! I've been trying to work it out using the HMRC website but it's making my head spin!

Would anyone be able to give me an idea of whether I am able to claim anything back please?

The figures:
Earnings from employment last year: £8862. Tax code was 747L.

Interest on savings: £220 gross. Taxed at 20%. Is this a joint account ? as tax has been deducted @ 10 % already (£220 x 10 % = £22.00, if its a joint account the interest would be £110 each and if your a tax payer tax due would be £110 x 20 % = £22.00
Repayment on capital from national savings certificates: £270 plus some interest. Should these figures be included?

I also have an isa. Am i right in thinking that interest from this is not included in calculation?

Thanks in advance for any help :beer:

So pjclar02 is right, the right amount of tax has been deducted, as you cant receive interest paid gross if your income exceeds your tax allowance, which last year was £7475.

For which year was the interest paid (ie what date in the year did you receive it ?).

chrisbur

antonic wrote: »

So pjclar02 is right, the right amount of tax has been deducted, as you cant receive interest paid gross if your income exceeds your tax allowance, which last year was £7475.

For which year was the interest paid (ie what date in the year did you receive it ?).

It is true that you cannot have your interest paid gross by the bank/building soc. if your income is over the basic personal allowance; but their is a band of income above this, which if your income falls within it, means only 10% tax is due instead of the 20% deducted by the bank/building soc. on some or all of the interest.

As far as I can tell the OP has not mentioned that this was a joint account ; but if it was then the 10% tax might only apply to their half of the interest but it would still result in some tax back.

jem16

Pineapple88 wrote: »

Thanks for the replies. It looks like I will be able to claim a little bit back then :j

I've had a look at the examples before posting but I just couldn't follow the calculation. I think I better given HMRC a ring before sending of the forms to check that I'm doing them right.

Basically the working is like this;

Total income is £9082. Taxable income is £9082 minus £7475 which is £1607.

However earned income is £8862 minus £7475 which leaves £1387 of it taxable at 20% presumably handled through PAYE.

The 10% savings band for 2011/12 was £2560. £2560 minus the earned taxable income of £1387 leaves £1173 of that band still to be utilised against any savings income. Your £220 is well within that so would be taxed at 10% as opposed to 20%. Interest taken by the bank would be £44. Interest due would actually be £22 if only in your name.

If the account is only in your name you are due a refund of £22. If it was a joint account you are due a refund of £11.

Pineapple88

Antonic- no its not a joint account.

Jem16- thank you very much for explaining that, it's much clearer now. You're a star!