Abolition of 10% Tax Band in April 2015

fizzypop

According to HL ...

From April 2015, the 10% tax rate for savings income will be
abolished. Instead, the first £5,000 of savings income will be
tax free, meaning that up to £15,500 of an individual’s savings
total income could avoid tax, after taking into account the
£10,500 personal allowance.


How will this work in practice, is it as simple as it looks or am I
just suspicious of the government's motives? What do others think?

Cyberman60

Look upon it as a gift from the Tories.

agrinnall

If that's actually what HL say then it's quite badly worded, as the total income doesn't have to be just from savings (although it could be). If the total income from all sources is £15,500 or less then the part over £10,500 that is due to savings income will be tax free.

And the government's motive is crystal clear: 2015 is an election year, so it's a bribe to people who benefit from this change.

zygurat789

agrinnall wrote: »

If that's actually what HL say then it's quite badly worded, as the total income doesn't have to be just from savings (although it could be). If the total income from all sources is £15,500 or less then the part over £10,500 that is due to savings income will be tax free.

And the government's motive is crystal clear: 2015 is an election year, so it's a bribe to people who benefit from this change.

Given that interest rates are so low you would have to have cash savings of over £160,500 at 3% to fully benefit from this; I would have thought that most people with this sort of money in cash deposits would have it in more sophisticated investments. NISAs now have a cash limit of £15,000 pa so it would only take a couple 5 years to achieve close to this so I would have thought that this would not benefit that many people and those it would will probably remain unaware of it and loose out.
The 10% savings band was reduced by income, I haven't seen it written that this won't apply to the 0% band.
All in all this is a very small gift but it sounds almost as good as halving oue EU subs and getting 12 months free credit.
The other thing is that the tax rate is 0% so technically you are still paying tax although the amount is zero. Is this just GO not understanding tax again or is there some hidden clause somewhere "if tax is paid then......."

molerat

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

Every little helps, add this to the £1050 additional tax allowance from MrsM.