No more basic rate tax on savings interest?

noh

Ed-1 wrote: »

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.

It is part of your income but not part of savings income.
It is something that HMRC classes as an "annual payment"
It is a payment made under a legal obligation arising from the contract between the customer and Halifax Bank.
Halifax are obliged to withold 20% tax.
It is not interest and is therefore not affected by the budget proposals.

enthusiasticsaver

As I understand it this still has to be voted on and will not come in unless the conservatives get into power so I guess all this could be moot. I am not counting any chickens yet but like others I am interested as to how this will be administered. Presumably the only way they can do this is that everyone will receive interest gross and then be responsible for paying the tax on everything over £1000 and I can see many people not bothering to do that.

steelbru

Perhaps as has been said elsewhere that to get it paid gross you'll need to give all your banks your NI number and they'll then all report back to HMRC who will then know how much you've been paid.

tigerspill

With getting £1000 interest tax free, does this mean at say 1% interest, does this mean I can save £100K and collect the interest tax free (Basic Rate Tax payer). If so, not sure what the point of Cash ISAs are going forward.
Or am I missing something

MadMat

Does this mean P2P lending is now Interest free up to 1k profit per year ?

Mat

2010

Ed-1 wrote: »

Then it wouldn't be a 123 account - it'd be a 0.81.62.4 account! Hardly has the same ring to it...

Banks only need half an excuse to cut rates.
It may be called the 123 account but there`s nothing to stop them cutting the rate to 2.4% as the rate is variable not fixed.
Also a great excuse for the Halifax to to pocket the extra £1-50 and still reward you with a fiver.
What you`ve never had you`ll never miss is the way they`ll look at it.

Archi_Bald

2010 wrote: »

Also a great excuse for the Halifax to to pocket the extra £1-50 and still reward you with a fiver.

Someone 'pocketing' their own money. Whatever next.

Archi_Bald

tigerspill wrote: »

With getting £1000 interest tax free, does this mean at say 1% interest, does this mean I can save £100K and collect the interest tax free (Basic Rate Tax payer). If so, not sure what the point of Cash ISAs are going forward.
Or am I missing something

MadMat wrote: »

Does this mean P2P lending is now Interest free up to 1k profit per year ?

Mat

Not before April 2016 (and only if conservatives are in government)

Ed-1

Archi_Bald wrote: »

Not before April 2016 (and only if conservatives are in government)

To be fair Ed Balls said that Labour would support the savings changes 'in principle'.

Archi_Bald

Thanks, hadn't heard that before.