Tax on savings

Ronata

Trying to work out if I need to pay tax on my savings next year (2015/2016). Can anybody explain the Annual Saving rate Allowance, and how it works ? I think it is just added to the other allowances (like personal allowance), is this the case ?::T

teddysmum

Have a look here, where they quote examples, but the new allowance is £10600, instead of the £10500 mentioned.


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


ie if your total income is up to, but not above £10600, any part of this made up of savings will be tax free.However, as in one of the examples, you may pay tax, then have to reclaim it. (The latter would happen if your non-savings income was over £10600.)

SevenOfNine

This is a good link, with a calculation tool.
https://www.gov.uk/apply-tax-free-interest-on-savings/changes

bowlhead99

Ronata wrote: »

Trying to work out if I need to pay tax on my savings next year (2015/2016). Can anybody explain the Annual Saving rate Allowance, and how it works ? I think it is just added to the other allowances (like personal allowance), is this the case ?::T

Yes, ish.
Generally you will get £10.5k of personal allowance and £5k of savings allowance on the next money earned just from savings.

If you have total income of under £15.5k and some of it is savings income you will not need to pay tax on any of your savings income.

If you have £17k of total income and £2k of it is savings income and £15k from a job, then you will avoid paying tax on the first £0.5k of the savings income (because together with your wages it fits under the £15.5k barrier) and just pay normal 20% tax on the last £1.5k of your savings income.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/293961/8073_The_starting_rate_of_tax_on_savings_Budget_2014_Final_v1.0.pdf

(teddysmum is right, the basic personal allowance is actually £10.6k not £10.5k used in the examples)

Ronata

Hi Alter Ego,
The reason I asked was I have just completed the HMRC check list on the HMRC website and on the results under "Allowances" it states "Annual savings rate. = £5000 and it is added to all the other allowance (Personal Allowance,Marriage Allowance, Blind Allowance etc).
I had not heard of this either, so was just trying to seek clarification.

talexuser

The £5000 savings allowance was introduced in the last budget. If your earnings are under the personal allowance, then you pay no tax on savings interest (not shares or funds dividends) if it is below £5000.

Alter_ego

Ronata wrote: »

Hi Alter Ego,
The reason I asked was I have just completed the HMRC check list on the HMRC website and on the results under "Allowances" it states "Annual savings rate. = £5000 and it is added to all the other allowance (Personal Allowance,Marriage Allowance, Blind Allowance etc).
I had not heard of this either, so was just trying to seek clarification.

Yes I see now, others have given a better explanation.

SevenOfNine

talexuser wrote: »

The £5000 savings allowance was introduced in the last budget. If your earnings are under the personal allowance, then you pay no tax on savings interest (not shares or funds dividends) if it is below £5000.

Starting on 5 April. Great for me, R85's all over the place & with my small salary & even smaller company pension, I was just starting to get up close and personal with my PA limit :beer: