Tax on Interest: Budget Changes

planteria

thank you Archi Bald.

arcadia00

Archi_Bald wrote: »

It is irrelevant to anyone whose total income plus savings interest exceeds £15,500.

I don't think that is literally true is it?

Say you get £3000 carers allowance and £13000 interest. Total £16,000. Will your bill not be 20% of £500 = £100. (in 2015/16) ?

Archi_Bald

arcadia00 wrote: »

I don't think that is literally true is it?

Say you get £3000 carers allowance and £13000 interest. Total £16,000. Will your bill not be 20% of £500 = £100. (in 2015/16) ?

I have seen no evidence either in the existing legislation nor in the budget announcement that allowances other than the personal allowance come into play. Though I could be wrong and would be delighted if you can post the appropriate links.

arcadia00

Archi_Bald wrote: »

I have seen no evidence either in the existing legislation nor in the budget announcement that allowances other than the personal allowance come into play. Though I could be wrong and would be delighted if you can post the appropriate links.

I only added carers allowance for fun as it is a taxable allowance, it has nothing to do with my point really.

My point equally stands for someone not working but making £16000 in bank deposit interest. Their bill will be £100 in 2015/16. Unless someone can explain to me why not.

zagfles

arcadia00 wrote: »

I don't think that is literally true is it?

Say you get £3000 carers allowance and £13000 interest. Total £16,000. Will your bill not be 20% of £500 = £100. (in 2015/16) ?

Yes. It's if your earned (non savings) income is over £15,500 it's irrelavent.

There's a bit of an anomaly AIUI with pension contributions. Say you earned £16000, plus £1000 interest, and contributed £2000 to a pension.

If you contributed using an employer's scheme, your earned income would be reduced to £14,000 and so you'd get the £1000 interest tax free

But if you contributed the £2000 to a private (RAS) scheme, your income won't be reduced and you'd probably still have to pay 20% tax on the interest. I don't think they use "adjusted net income" for this, they just increase the 20% tax band but that's only of use to higher rate taxpayers.

But I could be wrong on this - anyone know?