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

SAHD_Jim

The Daily Mail claims that this is effectively tax free savings up to £100,000 - "with most accounts paying around 1 per cent".

The people at the Daily Mail have obviously not seen this site...

[Deleted User]

Tax at source is cheaper to administer for the Government and a more reliable collection method, hence VAT/PAYE/bank account interest paid after tax etc.

And yes, I'm arguing against something that will benefit me because I can see the problems ahead. The HMRC needs to collect all the tax monies due for the lowest possible cost with the least chance of tax avoidance/dodging for all citizens. This is not a good policy IMO.

Rollinghome

All the extra tracking and reporting of extra interest for people who may never have needed to complete tax returns before does seem an awful lot of faffing about and cost for little gain when the present system seems to work reasonably well.

Would be nice if politicians out to buy votes had the decency to use their own money instead of ours. None of them ever do.

When any chancellor gives a hand-out he just puts the cost of doing so onto my/your national credit card - the national debt, which one way or another, such as through yet another increase in VAT, has to be repaid.

The interesting history of the rise and rise of VAT: http://en.wikipedia.org/wiki/Value_Added_Tax_%28United_Kingdom%29

DougWeller

I've been retired for 7 years, and haven't filed a tax return in any case for at least 20 years or more. And now I will have to start because I have found good savings accounts and ISAs?
I wonder how many people like me (where the amount is fairly small in any case) will bother?
Doug

Archi_Bald

DougWeller wrote: »

I've been retired for 7 years, and haven't filed a tax return in any case for at least 20 years or more. And now I will have to start because I have found good savings accounts and ISAs?
I wonder how many people like me (where the amount is fairly small in any case) will bother?
Doug

You won't have to declare ISAs - never had to, no change.

I have been retired for over 10 years and have done self-assessments every year since. My affairs are simple - taxable income consists of a pension and some savings income. Takes all of 10 minutes to fill it in. Although I am an incredibly busy pensioner, I can eke out 10 minutes once a year for my tax affairs, and I don't think it is unfair to expect other pensioners who have to declare things to do similar.

Tax returns will be replaced with the new digital tax account. Details are scant as yet but it doesn't look particularly onerous to me. Especially if I get £500 or £1,000 tax free interest for doing so.

As to whether people will bother - I suppose this depends on how honest they are, and how much they fear being fined or prosecuted for tax avoidance.

SAHD_Jim

gsmlnx wrote: »

Tax at source is cheaper to administer for the Government and a more reliable collection method, hence VAT/PAYE/bank account interest paid after tax etc.

And yes, I'm arguing against something that will benefit me because I can see the problems ahead. The HMRC needs to collect all the tax monies due for the lowest possible cost with the least chance of tax avoidance/dodging for all citizens. This is not a good policy IMO.

But the whole point here is that there will no longer be any tax for 95% of people. It won't be a case of HMRC collecting it directly rather than at source, they won't need to collect it at all.

HMRC will simply need to focus on the 5% of people who earn a lot of interest rather than worrying if a Higher Rate payer has paid his extra £48 a year tax on the £20 a month interest he receives net of basic rate.

I may not be a massive fan of Gideon, but this is an example of simplification rather than complication.

ceredigion

SAHD_Jim wrote: »

But the whole point here is that there will no longer be any tax for 95% of people. It won't be a case of HMRC collecting it directly rather than at source, they won't need to collect it at all.

HMRC will simply need to focus on the 5% of people who earn a lot of interest rather than worrying if a Higher Rate payer has paid his extra £48 a year tax on the £20 a month interest he receives net of basic rate.

I may not be a massive fan of Gideon, but this is an example of simplification rather than complication.

Although I agree with what you are saying , surely if you really wanted to simplify the system and cut the admin costs , you would just remove the tax from interest full stop, end of.

ceredigion

One thing that has occurred to whilst reading this , is that the treasury has no desire or intension to see interest rise at any point in the future as that would cost them a lot of money in the future. Baring in mind that 20% of not a lot, is very little to them. Is probably not worth worrying about.

colsten

ceredigion wrote: »

Although I agree with what you are saying , surely if you really wanted to simplify the system and cut the admin costs , you would just remove the tax from interest full stop, end of.

And attract the eternal wrath of people who love to say the budget is only for the rich blah blah. As well as actually losing a significant amount of tax.

SAHD_Jim

ceredigion wrote: »

Although I agree with what you are saying , surely if you really wanted to simplify the system and cut the admin costs , you would just remove the tax from interest full stop, end of.

Removal is abolition not simplification.

Someone who has a million sitting on deposit will be earning £10,000 a year at 1%. Assuming HRT, they'd have a tax charge of £3,500 after the new £500 allowance. I'd suspect that is worth collecting. Remove the tiddlers, focus on the whales.