No more basic rate tax on savings interest?

NoMore

2010 wrote: »

IF this ever does come into force in April 16, expect the likes of Santander to cut their 123 current rate from 3% to 2.4%.

Why? It makes no difference to the amount they are paying out only who it is being paid out to.

Ed-1

NoMore wrote: »

Why? It makes no difference to the amount they are paying out only who it is being paid out to.

I expect some accounts will see changes as a result of paying gross interest such as the Halifax Reward as it would pay £6.25 rewards rather than £5 - doesn't quite have the same ring to it.

masonic

Broken_Biscuits wrote: »

i do wonder if this was done because there was a big call for p2p to be available in an ISA.

now you can have about 15k in peer to peer without paying any tax. Similar to an ISA, however, when p2p goes teets up and everyone loses money... no one can point the finger at the government and say you lost me this money by making me think p2p was safe by endorsing it with a tax free wrapper.

Interesting theory, but... S&S ISAs?

NoMore

Ed-1 wrote: »

I expect some accounts will see changes as a result of paying gross interest such as the Halifax Reward as it would pay £6.25 rewards rather than £5 - doesn't quite have the same ring to it.

Well thats a different case and would the £5 actually be classed as 'interest' ? Its not related to the balance of the account on how much you get, its just a reward for using the account.

Ed-1

NoMore wrote: »

Well thats a different case and would the £5 actually be classed as 'interest' ? Its not related to the balance of the account on how much you get, its just a reward for using the account.

The Reward is paid net. £6.25 gross, £5 net of basic rate tax.

noh

Ed-1 wrote: »

The Reward is paid net. £6.25 gross, £5 net of basic rate tax.

The £5 reward from Halifax is not interest and should not be affected by the budget proposals. It will still continue to be a taxable payment.

ffacoffipawb

2010 wrote: »

IF this ever does come into force in April 16, expect the likes of Santander to cut their 123 current rate from 3% to 2.4%.

The 0.8 1.6 2.4 account doesn't have the same ring to it.

Ed-1

noh wrote: »

The £5 reward from Halifax is not interest and should not be affected by the budget proposals. It will still continue to be a taxable payment.

There's no reason why it should be taxed as it forms part of your savings income (i.e. you can claim back the tax if you are not a taxpayer and have to pay 40% tax on the £6.25 if you are a higher rate taxpayer etc.). Given that the majority of people won't have to pay tax on their savings income, it would be ridiculous to tax the Reward payments as they would all be eligible to claim it back. I doubt their systems would support it either as they would default all savings interest/rewards to gross.

colsten

ffacoffipawb wrote: »

The 0.8 1.6 2.4 account doesn't have the same ring to it.

No but they could reduce the max you get interest on to a lot less than £20K, and still be competitive

ffacoffipawb

2010 wrote: »

IF this ever does come into force in April 16, expect the likes of Santander to cut their 123 current rate from 3% to 2.4%.

ffacoffipawb wrote: »

The 0.8 1.6 2.4 account doesn't have the same ring to it.

colsten wrote: »

No but they could reduce the max you get interest on to a lot less than £20K, and still be competitive

Perhaps, but that isn't what 2010 said - he referred to the rate not the maximum balance that earned the said interest.