should i still pay tax on savings?

lexi

Hello,
I was medically retired last nov. Due to reduced earnings now i am trying to get all my finances working for me as best as they can. MSE is a brilliant way of getting help SO.......I have always paid tax on my savings, obviously ISA's apart. My mum, who is non-tax paying, asked me if i had checked if i didnt have to pay tax now i am not working. I understand there are forms that you fill in, but dont know the criteria for doing this. Does anyone know what you need to qualify so to speak. I understand i could go to my nearest building society, but i dont want to look a complete muppet as i most likely have got things wrong.

Bean_Counter

I guess it would depend whether you are going to be a taxpayer overall or not. Is your taxable earnings, including any pension etc likely to be over the income tax threshold of £5,225?

CLAPTON

just to complete the info

in tax year 2007-8 if your total income i.e. pension plus gross interest (exclude ISA) is less than 5225 then you should pay no tax,
in this case register your saving accounts for interest paid gross .. form R85 from the B. Soc. (you need your NI number as I recall). you need to do this for each account even if they are with the same B Soc.

if your income will be less than 7455 (i.e. 5225 + 2230) then you will on pay 10% on the excess. You will need to write to the HMRC at year end to get a refund.

lexi

CLAPTON wrote: »

just to complete the info

in tax year 2007-8 if your total income i.e. pension plus gross interest (exclude ISA) is less than 5225 then you should pay no tax,
in this case register your saving accounts for interest paid gross .. form R85 from the B. Soc. (you need your NI number as I recall). you need to do this for each account even if they are with the same B Soc.

if your income will be less than 7455 (i.e. 5225 + 2230) then you will on pay 10% on the excess. You will need to write to the HMRC at year end to get a refund.

Well as i am currently on IB i am guessing i will qualify as i am currently on £ 89 pw. I will have to add up my interest i recieved from my accounts ( dont think its that much!). I will ask for a form & see what they say. thanx very much, this has really helped me! One thing if i may. Because i fin work in nov 06, i was obviously paid wages before going onto IB. Will they want these details if i am trying to be a non-tax pauyer? I am paranoid about doing something wrong, so i guess i just need clarification. thanx again

Bean_Counter

You need to watch as some incapacity benefit is taxable and some isn't. I believe that lower rate short-term incapacity benefit and transitional awards of incapacity benefit isn't taxable, but higher rate short-term, and long term, incapacity benefit is (I think.)

The following links might help:

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/TaxOnBenefitsPensionsAndMaintenance/DG_10027059

http://www.adviceguide.org.uk/index/life/tax/tax-exempt_and_taxable_income.htm

and para 4.4 on page 10 of http://www.hmrc.gov.uk/worksheets/sa210.pdf

If you stopped work in Nov 06, you might be due a tax rebate for 2006 / 07. HMRC should be able to tell from your P45.