Tax on saving accounts

augusto

Hi All,

Next year I'm going to get over the threshold for the basic tax rate of 20% (I'm a permanent employee) . I'm wondering if I need to tell this to my bank and start paying 40% on my non-ISA savings account too (which would suck, but would suck less than being caught by HMRC).

Thanks,
Augusto

TCA

Additional tax payable is paid via a tax return. 20% is all that is deducted by the bank. You can always make some pension contributions to reclaim some (or all) of that 40% as tax relief in the form of additional contributions by HMRC into your pension.

Keep_pedalling

No, the bank will not do this. What you should do later in the coming financial year is register for self assessment, although you won't need to complete one until the end of the next financial year, so you have a chance to shift another £15k of savings into a NISA which will save your little bit of tax.

colsten

Your bank won't care, they will only take 20% tax of your interest (outside ISAs). HMRC does care, and you have to tell them if you are a higher or advanced rate tax payer and get interest outside ISAs.

Under present legislation, you will be able to reduce your taxable income by increasing your pension contributions. That way, you might be able to stay a basic rate tax payer, and you stand to benefit in later life. Win-win for you. Head over to the Pensions board if you need more information about this.

augusto

Thanks a lot chaps!