Tax saving tip for pensioners

Walking_stick

By deferring the purchase of the pensioner bonds to the new tax year
You will save paying tax on the interest as the interest will then be credited
in 2015/2016 tax year when no tax will be deducted at source.

If the full amount of £40000 is invested this will result in a saving of £272 tax with a £75 loss of interest by delaying the investment

sleepless_saver

The tax free interest is not planned to start until 2016-17 financial year. And the £40000 you mention is the maximum for a couple.

ceredigion

No £200 max if you are lucky

bowlhead99

Clearly just a typo on dates from Walking Stick - it's true that if you hold off investing to the new tax year (this time next month would be the 15/16 tax year) then the interest would be paid in the 16/17 year when the tax free interest regime has started.

You're right, you'd need to be a couple to get more than £200 tax saving because that's what £1000 per person at basic rate or £500 at higher rate will max out at. But of course, with the new 0% £5k tax band starting an entire year earlier, people expecting to earn under £15k during 15/16 will avoid tax on their savings income so they could go ahead and invest in the bonds tomorrow and when they get the interest next March they'll catch that new allowance.

Eco_Miser

bowlhead99 wrote: »

But of course, with the new 0% £5k tax band starting an entire year earlier, people expecting to earn under £15k during 15/16 will avoid tax on their savings income so they could go ahead and invest in the bonds tomorrow and when they get the interest next March they'll catch that new allowance.

That is true, but they will still have the tax withheld, and have to reclaim it from HMRC; whereas if they wait a few weeks, the interest will be paid in 2016/7, and no tax will be deducted, and no forms will have to be filled in.

No tax saving, but a nice reduction in hassle.