Tax on savings

Nellybee

Hello
I have planned to stop working full time in January and sort of live on my savings .I maybee try for something part time in the future but for the time being the intrest of my savings will be my only income .What i want to no is it possible to get the intrest tax free

CLAPTON

Nellybee wrote: »

Hello
I have planned to stop working full time in January and sort of live on my savings .I maybee try for something part time in the future but for the time being the intrest of my savings will be my only income .What i want to no is it possible to get the intrest tax free

yes you need to fill in a R85 for each a/c and give to your saving company
often you can do this online

do note you can only do this if you income is less than 9440 in the whole tax year

xylophone

See http://www.hmrc.gov.uk/taxon/ten-percent.htm to work out whether or not you will be entitled to the 10% band.

anamenottaken

CLAPTON wrote: »

yes you need to fill in a R85 for each a/c and give to your saving company
often you can do this online

do note you can only do this if you income is less than 9440 in the whole tax year

To expand on Clapton's note -

The £9440 for the year includes gross interest from your savings as well as your PAYE income from 6 April 2013 to whenever you receive your final pay. If you have been working full-time it is unlikely that your total income will enable you to complete a R85 for the current tax year.

uknick

One thing to bear in mind if you live off savings is your status for insurance purposes changes.

I found my car insurance increased significantly when I was no longer working.

zygurat789

uknick wrote: »

One thing to bear in mind if you live off savings is your status for insurance purposes changes.

I found my car insurance increased significantly when I was no longer working.

But I noticed no change

patanne

My insurance actually went down even though I increased the annual mileage from 5k to 7k. Do follow Xylophone's link re 10% rate if your earnings are under £9440. I am hoping to use this for my mother's tax next year so my fingers are crossed that they don't stop it!

xylophone

if your earnings are under £9440

Not exactly- see link and read carefully.

"Example 4 - a saver with earnings above their Personal Allowance but they don't exceed the savings starting rate limit
Frank has earnings from employment of £10,000 and savings income of £4,000. Frank's Personal Allowance is £9,440 because he was born after 5 April 1948. Frank's taxable income is £4,560. The calculation below shows how this is worked out.
Total income £14,000
Less Personal Allowance £9,440
Taxable income £4,560
Frank's Personal Allowance is all used against his earnings of £10,000 so only £560 (£10,000 - £9,440) is taxable. The rest of the starting rate limit for savings (£2,790 - £560 = £2,230) can be used against savings income. The calculation below shows how this is worked out. Frank's earnings are taxable before his savings income.
Earnings £560 x 20 per cent = £112.00
Savings £2,230 x 10 per cent = £223.00
Savings £1,770 (£4000 - £2230) x 20 per cent = £354
Total tax = £689.00
Frank's employer has deducted £112 income tax from his earnings through Pay As You Earn. Frank's bank will have taken tax off all of his interest at 20 per cent so they will have taken off £800 (£4,000 x 20 per cent = £800). So Frank has paid a total of £912 tax at source (£112 + £800). But Frank is only due to pay £689.tax. This means he can claim a repayment of tax from HMRC of £223 (£912 - £689)."

zygurat789

xylophone wrote: »

Not exactly- see link and read carefully.

"Example 4 - a saver with earnings above their Personal Allowance but they don't exceed the savings starting rate limit
Frank has earnings from employment of £10,000 and savings income of £4,000. Frank's Personal Allowance is £9,440 because he was born after 5 April 1948. Frank's taxable income is £4,560. The calculation below shows how this is worked out.
Total income £14,000
Less Personal Allowance £9,440
Taxable income £4,560
Frank's Personal Allowance is all used against his earnings of £10,000 so only £560 (£10,000 - £9,440) is taxable. The rest of the starting rate limit for savings (£2,790 - £560 = £2,230) can be used against savings income. The calculation below shows how this is worked out. Frank's earnings are taxable before his savings income.
Earnings £560 x 20 per cent = £112.00
Savings £2,230 x 10 per cent = £223.00
Savings £1,770 (£4000 - £2230) x 20 per cent = £354
Total tax = £689.00
Frank's employer has deducted £112 income tax from his earnings through Pay As You Earn. Frank's bank will have taken tax off all of his interest at 20 per cent so they will have taken off £800 (£4,000 x 20 per cent = £800). So Frank has paid a total of £912 tax at source (£112 + £800). But Frank is only due to pay £689.tax. This means he can claim a repayment of tax from HMRC of £223 (£912 - £689)."

When you have read and understood the above remeber that:-
GO is getting rid of age allowance on the pretext that, with the earnings limit, it is too complicated.

uknick

zygurat789 wrote: »

But I noticed no change

What did you tell them your status was; unemployed, living off independent means or house person?

I found it was only the house person category that did not increase the premium.

zygurat789

uknick wrote: »

What did you tell them your status was; unemployed, living off independent means or house person?

I found it was only the house person category that did not increase the premium.

The truth which is none of the above