MSE News: Budget'15: Savers to get up to £1k personal allowance before interest taxed

Former_MSE_Paloma

Basic rate tax payers will be able to earn £1,000 in interest before paying tax ...

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Budget 2015: Savers to get up to £1,000 personal allowance before interest is taxed'




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Archi_Bald

Discussed here https://forums.moneysavingexpert.com/discussion/5200287

Oblivion

I'd love to know how they expect to administer this since George also said they want to do away with the annual tax return.

Aretnap

Oblivion wrote: »

I'd love to know how they expect to administer this since George also said they want to do away with the annual tax return.

At a guess... interest will no longer be taxed at source. Banks will report the amount of interest you are paid to HMRC. If the total interest across all of your (non-ISA) accounts exceeds £1000 (or £500) then HMRC will send you a bill at the end of the year - or adjust next year's tax code.

Archi_Bald

It's a long time away and any May/June emergency budget could kill it all. But the plan seems to be:

From April 2016 banks and building societies will stop automatically taking 20% in income tax from the interest earned on your non-ISA savings.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/414026/Savings_factographic_final.pdf

jem16

Oblivion wrote: »

George also said they want to do away with the annual tax return.

Not quite - the paper tax return is to be abolished in favour of digital tax returns.

Oblivion

jem16 wrote: »

Not quite - the paper tax return is to be abolished in favour of digital tax returns.

Since government websites never seem to work properly, that's going to be interesting. I presume those without the internet will simply pull the duvet up and not worry about it anyway.

jem16

Oblivion wrote: »

Since government websites never seem to work properly, that's going to be interesting. I presume those without the internet will simply pull the duvet up and not worry about it anyway.

You can still do a paper tax return if you want to.

Paper tax returns to be replaced by "real time" online accounts by 2020.

http://www.bbc.co.uk/news/business-31937637

badger09

More 'tax simplification'

jamesd

"The Government is still to confirm exactly how any tax owed above the allowances will be paid, though it is likely to be via the PAYE or the new self-assessment system"

The Government announced that it will be done via PAYE notices of coding in the same document as the one that introduced the allowance: Budget 2015, on page 78:

"2.84 A new Personal Savings Allowance – The government will introduce an allowance from 6 April 2016 to remove tax on up to £1,000 of savings income for basic rate taxpayers and up to £500 for higher rate taxpayers. Additional rate taxpayers will not receive an allowance. As part of these reforms, HM Revenue and Customs (HMRC) will introduce automated coding out of savings income that remains taxable through the Pay As You Earn system from 2017-18, with pilots starting in autumn 2015. (Future Finance Bill)"

Some interest still won't be handled by the system, for example foreign interest income, and that can be handled by the new online process and options to pay, one of which is also going to be coding changes.

colsten

Oblivion wrote: »

Since government websites never seem to work properly, that's going to be interesting.

I have been doing my self assessments online for a decade with no problems. You should try it, it's basically as easy as using the MSE forum.

Oblivion wrote: »

I presume those without the internet will simply pull the duvet up and not worry about it anyway.

Surely everybody who is likely to have to do a tax return and/or use the new tax accounts will have access to the internet somehow? If not at home, then at work, in a library, at family and friends? Or even their accountant.