Tax Issues with Savings Interest

James01

Hi All, just wondering if anyone can clarify this as I can't get my head round it. As an example if you earn £8000 a year wages but have savings interest of £4000 and are on 944 tax code, as I understand it your bank interest would be paid less 20% tax, but I have been reading where it could be taxed at 10% if you are a low earner. Another thing, if your wages and bank interest did add up to £12,000 as above should you be paying income tax as well as tax on your savings. All hypothetical but I would like to understand how it works.

teddysmum

I asked my bank about this, a few weeks ago and was told that when the taxman was informed of my savings interest, I would be billed for tax on anything which took me over the allowance threshold. My account has an R85 form submitted.

xylophone

have been reading where it could be taxed at 10% if you are a low earner.

See here for the current situation. http://www.hmrc.gov.uk/taxon/worked-examples.htm

But See http://www.ftadviser.com/2014/03/19/ifa-industry/tax-planning/budget-tax-rate-on-savings-income-abolished-KozlMYXopLS179o6t3MUVK/article.html