saving account and their interests

helptoyou

Hi If you google r85 helpsheet this should help you

JustLikeThat

There seems to be confusion here between the rules for ISAs and a savings account. Interest for a savings account may be paid yearly but not tied to any particular tax year. If the interest + other income in a particular tax year is less than the personal allowance, there will be no tax to pay. If additional funds are added to the savings account (does not have to be in a separate tax year and usually as much as you like), more interest will be earned of course. Again if the interest + other income is less than the allowance = OK.
I shall not comment on other issues with this post.

xylophone

No tax at all is payable on interest earned in an ISA whether or not the account holder has income above his personal allowance - the amount that can be deposited in a cash isa in each tax year is limited - in the current tax year (2013-14) it is £5760.

An individual may deposit as much money as he likes in other accounts- if he knows the interest earned on all such accounts in the tax year, when added to his other income, is going to be below his personal allowance, then he can complete R85 for each account so that the interest can be paid gross.


There are certain circumstances where a person may not be eligible to complete R85 because his savings interest will be over his personal allowance for the tax year and yet will be owed a tax rebate because he has savings income (interest) that falls within the 10% band.

http://www.accountingweb.co.uk/topic/tax/new-guide-10-band-savings-income but the tax bands used in these examples are out of date
You need to refer to my previous link.

How much tax an individual pays depends on
his income (including savings income) in a tax year.

suelees1

I finished work last summer and this tax year it's looking like my taxable income (from private pension + savings interest) will be less than my personal allowance. I've got a number of savings accounts, some in my own name and some jointly. I'm therefore about to inform the various organizations with which I bank + my pension provider. What if I'm wrong and my income or part of it should have been taxed? I'm really confused about it all.

Herbalus

suelees1 wrote: »

I finished work last summer and this tax year it's looking like my taxable income (from private pension + savings interest) will be less than my personal allowance. I've got a number of savings accounts, some in my own name and some jointly. I'm therefore about to inform the various organizations with which I bank + my pension provider. What if I'm wrong and my income or part of it should have been taxed? I'm really confused about it all.

If your income from last tax year was less than the amount specified, then you can write to HMRC and claim back any tax that you paid between April 2012 and April 2013. We are now in a new tax year.

There should be no confusion - add up all your sources of taxable income from work/pension/taxable savings interest (not ISAs) etc and if it is less than £8,105* you have no tax to pay. If you have paid some, HMRC will refund it, but you may have to prod them.

I noticed you said pension, in which case you might be older than 65:
for 65-74 the limit is £10,500
for over 75 the limit is £10,660.

Source: http://www.hmrc.gov.uk/rates/it.htm

xylophone

See http://www.hmrc.gov.uk/helpsheets/r85-helpsheet.PDF

In the tax year 2012-13, the basic tax allowance for under 65's was 8105.
For the current tax year see link above.

See also 10% guidance see post 14

suelees1

I mentioned this tax year because that's what I meant ie 2013/2014. I've done a rough estimate of what my taxable income from all sources will be by April 2014 and it's just under the threshold. However I reach state pension age one month before the end of the tax year so if I don't defer it then it could take me over the threshold. I'm assuming if this is the case and I should have paid some tax then HMRC will send me a demand?

xylophone

http://www.hmrc.gov.uk/forms/r85.pdf
See declaration on form- the onus is on you to advise the building society-if you still find you have underpaid the onus is on you to advise HMRC.

If you don't think it's worth the hassle, don't complete R85 but submit reclaim form on R40 at the end of the tax year?

Make sure you have checked out the 10% link above.

suelees1

Santander confirmed they don't need the R85 and will accept my word and no longer deduct income tax. I'm a bit confused with the Post Office which is a joint account. My husband is a tax payer so PO tell me although they don't need the R85 they'll still deduct the full amount of income tax from the total interest and it will be up to me to contact HMRC. Is that correct?

Hominu

I'd fill in an R85 for each account and post to both banks regardless of what you have been told.

Claiming interest tax back from HMRC is far more difficult than just not taking it off in the first place.