Savings free of tax for total incomes less than £15,500 from April 2015

cepheus

Due to all the focus on ISAs and pensions, I guess many people which partly rely on investment income outside the tax free wrappers have missed that they will be able to receive £15,500 pa income tax free from savings alone. from 2015

The Chancellor has also abolished the 10 pence starting rate for tax on savings which will help low-income savers. From April 2015 the starting rate of savings income tax will become 0% and the amount of savings income that the rate applies to will increase from £2,880 to £5,000. This will mean that anyone with a total income (including wage, pension, benefits and savings income) of less than £15,500 – your personal allowance at the 2015 £10,500 rate, plus £5000 - will not pay any tax on their savings, however, you must register for this by filling out an R40 form.

wearethedogs

Only applies to people with total income between 10k and 15k where the majority of their income comes from savings interest. Bit of a non-story if you ask me.

Biggles

however, you must register for this by filling out an R40 form

Not sure where that came from. Surely, to register for interest free of tax you need to complete an R85; an R40 is only for claiming it back after the event.

teddysmum

Biggles wrote: »

Not sure where that came from. Surely, to register for interest free of tax you need to complete an R85; an R40 is only for claiming it back after the event.

I thought it was an R85, too.


If a couple has income where one pays tax and the other doesn't, they could use the second person's allowance by putting the savings into the name of the person on lower income. However, I wonder if this would cause problems should this person need care, as assets are considered on an individual basis or 50/50 in the case of a shared account.

cepheus

wearethedogs wrote: »

Only applies to people with total income between 10k and 15k where the majority of their income comes from savings interest. Bit of a non-story if you ask me.

I interpreted it as meaning you could have income from any source, say high interest bonds or P2P lending for example, but I could be wrong. Few people would have enough saved to receive 5k interest via a bank account, and if they did it would be an unwise investment.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/293747/Fact_sheet_template_-_10__tax_9.pdf

pjread

Sounds like a winner for single-earner households, shove the savings in the non-earner's name. Cash wise, non-ISA rates seem better enough than ISA to make that sound sensible (to me at least), and if that changes each can shovel 15k a year in when it does... Right?

crisp

wearethedogs wrote: »

Only applies to people with total income between 10k and 15k where the majority of their income comes from savings interest. Bit of a non-story if you ask me.

if you are a pensioner with a combined state pension and SIPP of say £12k a year and savings interest of £10k; should your savings be tax free?

epicurate

£3.5k will be, the rest will be taxable at basic rate. Remember this doesn't come in until next April

cepheus

Savings income

For the purposes of the tax rates which apply to income, ‘savings income’ is defined in ITA07/S18 as:

interest chargeable under ITTOIA05 Chapter 2 Part 4 (SAIM2000)

I think P2P is defined thus

https://support.fundingcircle.com/entries/22557912-What-are-the-tax-consequences-of-lending-as-an-individual-

SAIM2400 - Interest: taxation of interest: the tax charge
http://www.hmrc.gov.uk/manuals/saimmanual/SAIM2400.htm

Archi_Bald

Very misleading thread title, and other incorrect info thrown into some posts.



The principle of calculations will remain the same as befor. You can find some worked examples here: http://www.hmrc.gov.uk/taxon/worked-examples.htm
Just substitute the old with the new limits/percentages.

teddysmum

pjread wrote: »

Sounds like a winner for single-earner households, shove the savings in the non-earner's name. Cash wise, non-ISA rates seem better enough than ISA to make that sound sensible (to me at least), and if that changes each can shovel 15k a year in when it does... Right?

I have a limited instant access (4 withdrawals/year) account, which is paying better than many ISAs.


The problem with using the low earner's tax allowance could be troublesome for pensioners, should that person need care. Worse case scenario they would insist that all the money in the account was that person's asset or not quite so bad, apply the 50/50 rule as used with joint accounts.(eg suppose a couple have £50000 in a joint account, they don't take the cared for person's £25000 as needing to be reduced by £1750 to £23250, before help.The whole amount has to be reduced to £46500.)