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

colsten

steelbru wrote: »

He's also ruled out a coalition with the SNP

That doesn't mean that the SNP won't be pulling the strings.

Goldenyears

jamesd wrote: »

You won't have to fill in a digital tax return because of these changes. The banks will report the interest to HMRC just as they do now and HMRC will modify their systems to automatically use that information to adjust your tax code for PAYE.

I don't see how there is a satisfactory unique identifier for non-ISA accounts. Account holders can be sole or multiple. Addresses can vary slightly.

Apparently according to this thread I am in very small minority. My non-ISA interest from cash is about £4,000 pa. I am a standard rate pensioner taxpayer and I don't do SA, although before retirement I was paying HR tax and sent letter statements of savings interest to HMRC. I am slightly annoyed that this gift of £200 is going to upset my quiet life! It will cost me a net £600 pa that I will eventually get back from maturing fixed term bonds after 3-5 years. Cant they just send me £200 and tax my interest at source!

Archi_Bald

Goldenyears wrote: »

I don't see how there is a satisfactory unique identifier for non-ISA accounts. Account holders can be sole or multiple. Addresses can vary slightly.

True - but that's very easily solved by e.g. using the NI number on all accounts (like we do for ISAs). I don't know whether this is the plan but I do know that the banks already report all interest payments for everybody to the HMRC, under the EU savings directive so they might already have solved that problem.

Goldenyears wrote: »

Cant they just send me £200 and tax my interest at source!

The planned system is to make it easier for the 95% of savers who don't make more than £1,000 a year in interest, rather than inconveniencing those 95% for the benefit of the remaining 5%. Seems eminently fair to me, and I am in the other 5% myself.

jamesd

The linking could be done via NI numbers if the bank has them and the account holder has an NI number. Alternatively HMRC could ask people to tell them about their accounts and split of ownership.

You're not alone here in having that sort of non-ISA taxable interest. I probably have something over that much this year in unwrapped interest, mostly untaxed foreign source interest.

theGrinch

Mr_K wrote: »

Even though I'd benefit quite a bit, the NHS need this money rather than wealthy savers. How come we have money to give away all of a sudden, don't we have a deficit ?

We all know why this has suddenly happened, Budgets should be banned 6 months before an election. Lots of tax rises next Budget whichever clown delivers it.

feel free to donate any tax on interest you save back to the government to spend as they please

theGrinch

this is generally a good idea but badly formed. It will be disproportionately more expensive to administer, lead to confusion from many unfamiliar with filing tax returns = fines.

much better to abolish tax on savings all together, I doubt its a huge amount of loss revenue, which cant be made up elsewhere or just sliced off bloated spending.

jamesd

Imagine the fuss when it is learned that after abolishing tax on savings interest, a multi-billionaire is getting 5% interest and saving ten million Pounds a year in basic rate income tax, or twenty million of higher rate on the one billion they have in an emergency pot in savings accounts.

The limit keeps the main benefit to those who are not at the very top of the income range, more efficiently using the lost income tax revenue to help those with lower incomes than the uncapped way would.

Spidernick

jamesd wrote: »

Imagine the fuss when it is learned that after abolishing tax on savings interest, a multi-billionaire is getting 5% interest and saving ten million Pounds a year in basic rate income tax, or twenty million of higher rate on the one billion they have in an emergency pot in savings accounts.

The limit keeps the main benefit to those who are not at the very top of the income range, more efficiently using the lost income tax revenue to help those with lower incomes than the uncapped way would.

Methinks you haven't read the conditions of the proposed change!

DougWeller

Archi_Bald wrote: »

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.

Thought I'd edited out 'Isas', I can't imagine why I added that.
I'm thinking of people who haven't file in a long time. I wonder if they will get a notice of the need to file. If they don't, I still expect many won't realise they should

Eco_Miser

Spidernick wrote: »

Methinks you haven't read the conditions of the proposed change!

Methinks you haven't read the post from theGrinch that jamesd was replying to - namely abolish savings tax altogether.