Savings interest part gross and part net

thegreenmonkey

Hi all,

Sorry for long post and brevity. Please could you flag anything wrong:

Earnings apply for tax year - it's what you earn Apr-Apr that's 'important'.

If I started my first job in March: as long as I don't earn more than my tax-free personal allowance of £10,000 during this month, I don't pay tax on savings interest until April.

Regular savings accounts – above scenario, regular saver opened before employment and matures with net interest payment after passing my first employed April. I can get a tax refund for the period before first employed April.

Thanks so much

Linton

1) earnings Apr-Apr: Yes
2) So can earn up to £10K tax free in Apr 2013-Apr 2014.: Yes
3) So interest earned prior to April 2014 is tax free: Interest paid before April 2014 is tax free. Any tax paid can be reclaimed. If you are paid interest annually a payment made after April 2014 is taxable even if part of it covers a period prior to April 2014.

CLAPTON

thegreenmonkey wrote: »

Hi all,

Sorry for long post and brevity. Please could you flag anything wrong:

Earnings apply for tax year - it's what you earn Apr-Apr that's 'important'.

If I started my first job in March: as long as I don't earn more than my tax-free personal allowance of £10,000 during this month, I don't pay tax on savings interest until April.

Regular savings accounts – above scenario, regular saver opened before employment and matures with net interest payment after passing my first employed April. I can get a tax refund for the period before first employed April.

Thanks so much

The key is PAID earnings or interest

so the money you are PAID between 6th April 2013 to 5th april 2014 counts within that tax year

anything PAID 6th April 2014 is this tax year.

thegreenmonkey

Linton wrote: »

1) earnings Apr-Apr: Yes
2) So can earn up to £10K tax free in Apr 2013-Apr 2014.: Yes
3) So interest earned prior to April 2014 is tax free: Interest paid before April 2014 is tax free. Any tax paid can be reclaimed. If you are paid interest annually a payment made after April 2014 is taxable even if part of it covers a period prior to April 2014.

Many thanks. As 'interest is calculated daily', I was hoping otherwise.

Does it work the other way round too? e.g. full-time employment: 3-year bond 2012-15 matures/pays May 2015, become unemployed June 2015 so 2015-16 tax year earnings <£10K - gross interest for the 3-year bond?

masonic

thegreenmonkey wrote: »

Does it work the other way round too? e.g. full-time employment: 3-year bond 2012-15 matures/pays May 2015, become unemployed June 2015 so 2015-16 tax year earnings <£10K - gross interest for the 3-year bond?

It would if you could find a bond that only pays interest at maturity. It's much more common for interest to be paid annually.

Linton

thegreenmonkey wrote: »

Many thanks. As 'interest is calculated daily', I was hoping otherwise.

Does it work the other way round too? e.g. full-time employment: 3-year bond 2012-15 matures/pays May 2015, become unemployed June 2015 so 2015-16 tax year earnings <£10K - gross interest for the 3-year bond?

It depends on the fixed term account ( I dont like the term "bond" for these as "bond" means something else in the investing world). Most pay interest annually but a few only pay interest on maturity. The tax is therefor taken annually or in one lump sum as appropriate. So you can reduce tax by the choice of account.