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Savings limit before tax?
Tazni
Posts: 69 Forumite
I was just wondering if there was a limit on how much money you could have in a savings account before you started paying tax on it? I earn well below the taxable amount but I'm worried that if I put too much in my savings that they will attempt to tax me on it somehow?
2012-2013 Deposit target £2663.05/ £3876.74 :j
Holiday Saving Target £400 / £1000
Holiday Saving Target £400 / £1000
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Comments
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I was just wondering if there was a limit on how much money you could have in a savings account before you started paying tax on it? I earn well below the taxable amount but I'm worried that if I put too much in my savings that they will attempt to tax me on it somehow?
How much you have in the account is irrelevant as only the interest is
taxable.
Put very simply - your personal allowance (amount you can earn including gross interest before you pay tax) this tax year is £81050 -
I have filled out an R85(?) form so I don't get taxed anyway, but I can't help but worry that if I have too much in savings that the tax office might try take advantage2012-2013 Deposit target £2663.05/ £3876.74 :j
Holiday Saving Target £400 / £10000 -
I have filled out an R85(?) form so I don't get taxed anyway, but I can't help but worry that if I have too much in savings that the tax office might try take advantage
They may have their incompetent moments but they will usually look to work out the right amount of tax an individual should pay.
A read of this link should help you.
But if all forms of income including savings interest are less than your personal allowance you have no worries.0 -
As badger09 and opinions4u already said, if your earnings plus the gross interest add up to less than your personal allowance (£8,105 this year), you will not have to pay any tax.
If your combined income exceeds the personal allowance, you will have to pay tax. This isn't the HMRC taking advantage of you - - these rules apply to everyone else in the UK, too.
If you think you get close to the allowance limit, it might be advantageous to put some money into a low- or non-interest account. Plenty of those about right now.0 -
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Interest earned on ISAs is tax free.3 stone down, 3 more to go0
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If you think you get close to the allowance limit, it might be advantageous to put some money into a low- or non-interest account. Plenty of those about right now.
That is actually a stupid idea, would you rather have 80p (after 20% tax on £1 interest) or 0p?Thinking critically since 1996....0 -
http://www.hmrc.gov.uk/tdsi/ten-per-cent-guidance.htm
Have a look at the above in conjunction with http://www.hmrc.gov.uk/rates/it.htm - the figures in the examples are out of date.0 -
opinions4u wrote: »Why?
Surely it's better to earn more and pay tax?somethingcorporate wrote: »That is actually a stupid idea, would you rather have 80p (after 20% tax on £1 interest) or 0p?
Yes, it was a stupid idea. Don't know why I thought you lose your allowance if you earn more than it - - must have been drinking a bad cup of tea today!
neolphobic's suggestion is of course brilliant, if the OP hasn't maxed their ISA allowance.noelphobic wrote: »Interest earned on ISAs is tax free.0 -
Yes, it was a stupid idea. Don't know why I thought you lose your allowance if you earn more than it - - must have been drinking a bad cup of tea
Benefit In Kind Tax.
If your receive a BIK and your income (including the value of the BIK) is under £8,500 you pay no tax on the BIK. The second you go above £8,500 the full value of the BIK becomes taxable.
As the personal allowance continues to increase and so few workers on such a low income get BIK anyway it will soon be a dead allowance.
Doubtless there are other anomolies in the tax system that are similar.0
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