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Budget 2014: Budget 2014: Pensioner Bonds coming for over-65s

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  • Murphybear
    Murphybear Posts: 7,331 Forumite
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    Can't see what the fuss is all about. My modest savings are in Premium Bonds. Yes, I know what Martin and others say, but with savings rates so low it is more fun to wait for that email each month to see if I have won anything. So far my return is just over 1% which is higher than a lot of accounts.
  • zygurat789
    zygurat789 Posts: 4,263 Forumite
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    Everyone appears to have overlooked the good news that the savings band has been increased from £2,880 to £5,000 AND the rate has been reduced to 0%. Unfortunately this will not happen until April 2015, however, it does mean that from that date ANYONE with an income of less than £15,500 will pay no tax on their savings.
    Has to be worth a thought or two. having moved all the savings to the lower earner years ago to avoid the higher rates we are now about to move them back to avoid the tax altogether.
    The only thing that is constant is change.
  • kuepper
    kuepper Posts: 1,367 Forumite
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    Murphybear wrote: »
    Can't see what the fuss is all about. My modest savings are in Premium Bonds. Yes, I know what Martin and others say, but with savings rates so low it is more fun to wait for that email each month to see if I have won anything. So far my return is just over 1% which is higher than a lot of accounts.

    there's an email each month? I dont get one!
  • kuepper
    kuepper Posts: 1,367 Forumite
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    zygurat789 wrote: »
    Everyone appears to have overlooked the good news that the savings band has been increased from £2,880 to £5,000 AND the rate has been reduced to 0%. Unfortunately this will not happen until April 2015, however, it does mean that from that date ANYONE with an income of less than £15,500 will pay no tax on their savings.
    Has to be worth a thought or two. having moved all the savings to the lower earner years ago to avoid the higher rates we are now about to move them back to avoid the tax altogether.

    never heard of this, thought all income over the personal allowance (now £10000 or a tad more if an older pensioner) was taxed at 20%, sure mine is. If youve got several ac's how could is it implemented by the banks?
  • zygurat789
    zygurat789 Posts: 4,263 Forumite
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    kuepper wrote: »
    never heard of this, thought all income over the personal allowance (now £10000 or a tad more if an older pensioner) was taxed at 20%, sure mine is. If youve got several ac's how could is it implemented by the banks?

    Yours maybe, it depends on your total income, up to 2015/16:-
    Below PA zero
    Below PA + savings rate band, savings income taxed at 10%
    Above PA + Savings rate band 20%.

    The banks would implement it in the same way as they do now.
    The only thing that is constant is change.
  • kuepper
    kuepper Posts: 1,367 Forumite
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    zygurat789 wrote: »

    The banks would implement it in the same way as they do now.

    how would a bank know what your income was from all sources? sure my savings have always been taxed at 20% irrespective of whether my income was below personal allowance level which it was for long time
  • zygurat789
    zygurat789 Posts: 4,263 Forumite
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    kuepper wrote: »
    how would a bank know what your income was from all sources? sure my savings have always been taxed at 20% irrespective of whether my income was below personal allowance level which it was for long time

    A bank knows because you tell it by filling in HMRC form R85 and giving it to them.
    The only thing that is constant is change.
  • [Deleted User]
    [Deleted User] Posts: 0 Newbie
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    edited 28 October 2014 at 11:10AM
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    zygurat789 wrote: »
    A bank knows because you tell it by filling in HMRC form R85 and giving it to them.

    I was browsing and I have just read your post zygurat. I did not know about this and for the year 2015-16 I am sure my gross income will still be well under £15,000 even after any small increase in April. I pay tax just now on my pension and on all my (modest but important to me) savings except the ISA I have.

    Would you, or anyone please, be able to give me a link to show that I might not have to pay any income tax on my savings from April 2015? I understand I would still have to pay tax at 20% above £10,500 on my pension. Even just to get tax free on my modest savings would be great - every penny helps.

    If I really am eligible, and I think I should be, would I need to fill in more than one of the forms R85 because I have a TSB account and a small Bank of Scotland savings account I pay tax on. I don't pay any tax on my ISA.

    Any information would be really appreciated, thank you. Should I keep my question here or would it be better on one of Martin's forums about Tax, please?

    Crimson
  • zygurat789
    zygurat789 Posts: 4,263 Forumite
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    For the calculation you need to split your total income between savings interest and the rest.
    If the rest of your income is less than your PA, BA, AA etc then you will be taxed on your savings interest up to a gross of £5,000 (boo) at 0% (hooray). There may be a reason for it being taxable at 0% rather than tax free but, if there is, I haven't read of it yet. All gross interest over £5,000 is taxed at 20%.
    If the rest of your income exceeds your PA etc then you will be taxed at 20% on the excess, however, you will pay tax at only 0% on any gross savings interest up to a total of, currently, £15,500 and 20% thereafter.

    OP, Why don't you puy all your savings into an ISA, assuming you can get equivalent rates, it would save all the hassle.
    The only thing that is constant is change.
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