Interest paid without deduction of tax

Silverjan

From April 2015, if total income - wages, pension, benefits and savings income - is less than the personal allowance, plus £5,000, savers will eligible to register for tax-free savings with their bank or building society. The basic tax-free personal allowance will be £10,500 in 2015/16.
So on this basis I picked up a form R85 to complete so the bank can start this from 6th April BUT this requires you only to sign if your income in UNDER the personal allowance. My income is OVER this but UNDER the allowance plus £5000. Is there a different form? Help appreciated:question::question::question:

neilsolaris

I don't know the answer, but can I ask a question for my own knowledge?

If you earn up to £5,000 above the personal allowance, will you not have to pay back the tax later? If so, what's the advantage of receiving the interest gross? Short-term cash flow advantage? Thanks.

ColdIron

Have a look at the pdf in the link below, it has some worked examples

https://www.gov.uk/government/publications/abolishing-the-10-rate-of-tax-on-savings-income-a-fact-sheet

Ed-1

Silverjan wrote: »

From April 2015, if total income - wages, pension, benefits and savings income - is less than the personal allowance, plus £5,000, savers will eligible to register for tax-free savings with their bank or building society. The basic tax-free personal allowance will be £10,500 in 2015/16.
So on this basis I picked up a form R85 to complete so the bank can start this from 6th April BUT this requires you only to sign if your income in UNDER the personal allowance. My income is OVER this but UNDER the allowance plus £5000. Is there a different form? Help appreciated:question::question::question:

There's a new R85 form coming out for the start of the tax year to accommodate the changes.

bowlhead99

Silverjan wrote: »

From April 2015... , savers will eligible to register for tax-free savings with their bank or building society

So, from April you will be able to do that. Maybe even a little before. But the current forms ask you the questions in relation to the current rules, where there is an assumption that anyone earning over the personal allowance will be a taxpayer (whether the money taking them over the personal allowance is bank interest taxed at 10% or employment / pension income taxed at 20%)

Is there a different form? Help appreciated:question::question::question:

Likely yes in due course so that you don't have to break the rules of the form and hope that they know what you mean. I'd hold tight for a while yet.

neilsolaris wrote: »

If you earn up to £5,000 above the personal allowance, will you not have to pay back the tax later? If so, what's the advantage of receiving the interest gross? Short-term cash flow advantage? Thanks.

There is a new starting rate of 0% for £5k of interest income over the personal allowance. So, you may not have to pay back the tax later because you may not owe any. But yes even if you had to pay it all back manually because you ended up over the limit, you'd have achieved a cashflow advantage which to some may be worth the hassle of having to complete paperwork to pay it back later.

[Deleted User]

Hi,

mmm, thanks for the info.

Will banks building societies be notifying savers?

The link above has a downloadable form.

neilsolaris

Thanks very much bowlhead for explaining that to me. That could be very useful to me too.

colsten

[Deleted User] wrote:

Will banks building societies be notifying savers?

Most unlikely as banks don't know whether you are a tax payer or not, and it is not their responsibility to inform you of changes in tax legislation. I would think it is fair to assume that everybody will have time once a year to check what their allowances are.

It's been in the papers, and will no doubt be highlighted again around Budget time. You can also check the HMRC website at your leisure.

If you miss it from day one, you have 4 years to claim back (from HMRC) any tax you shouldn't have paid.

jem16

Silverjan wrote: »

The basic tax-free personal allowance will be £10,500 in 2015/16.

Tax-free personal allowance for 2015/16 will be £10,600.

Silverjan

jem 16 : https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/293800/TIIN_8110_income_tax_personal_allowance_and_basic_rate.pdf

jem16

Silverjan wrote: »

jem 16 : https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/293800/TIIN_8110_income_tax_personal_allowance_and_basic_rate.pdf

I can assure you it's £10,600. I already have my P2 Coding Notice for 2015/16 from HMRC which clearly states £10,600 as the personal allowance.

See this more up-to-date notice.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/385235/Personal_Allowance_for_2015-16.pdf