Savings tax

THE_COBRA

Just received MoneySavingExpert's latest email.
Under Savings, it states that anyone with income over £10,000 this current tax year has to pay tax.
My understanding is that there is also a Savings Tax this year of £2,880 at 10%. If your regular earnings and savings interest come within the £12,880 you only pay 10% Tax on your savings interest, and can claim the other 10% back from HMCR.
Also from April 2015 the Savings Tax will be 0%, and goes up to £5,000, the Tax rate also goes up to £10,500. This means that if your regular income and savings income fall within the £15,500 then you will pay no tax at all.
I am new to this forum and apologise if this has been raised before. I am writing this to see if I am correct in my understanding of the Tax Allowances, and if anyone can verify this.

jem16

THE_COBRA wrote: »

I am new to this forum and apologise if this has been raised before. I am writing this to see if I am correct in my understanding of the Tax Allowances, and if anyone can verify this.

It has been raised before and yes you are correct.

The personal tax-free allowance goes up to £10,600 though and not £10,500.

bowlhead99

THE_COBRA wrote: »

My understanding is that there is also a Savings Tax this year of £2,880 at 10%. If your regular earnings and savings interest come within the £12,880 you only pay 10% Tax on your savings interest, and can claim the other 10% back from HMCR.

That's the right concept, there are some worked examples on this sheet: http://www.bsa.org.uk/document-library/consumers/taxationapril2014/

Also from April 2015 the Savings Tax will be 0%, and goes up to £5,000, the Tax rate also goes up to £10,500. This means that if your regular income and savings income fall within the £15,500 then you will pay no tax at all.

Just to be clear, it's only the savings income that you'll pay no tax at all on. So if your regular income and savings income was £14000 total of which only £1000 was savings income, you could pay 0% on that savings income but you'd be paying tax on the other stuff (over the first 10.5k)

Finally your figure of £10500 for 2015/16 is not really £10500 it is £10600.

The £10,500 figure is this year's basic tax band for people in their late 60s to mid 70s which will increase a little to £10,600 next year with everyone else
https://www.gov.uk/government/publications/tax-and-tax-credit-rates-and-thresholds-for-2015-16/tax-and-tax-credit-rates-and-thresholds-for-2015-16#income-tax-allowances