Personal Savings Allowance

PeacefulWaters

Neil_John_Roberts wrote: »

I asked in my local Santander Bank if interest earned in a current account would be considered as savings and be eligible for the allowance. To my surprise they did not know.

Well, the bank found out about the proposal at the same time as you.

The proposal is not yet law and is not expected to be implemented until April 2016.

Why would you have expected Santander to roll out in depth communications to staff yet?

Vortigern

PeacefulWaters wrote: »

The proposal is not yet law and is not expected to be implemented until April 2016.

The proposal in the most recent budget may not be implemented till April 2016, but a previous budget introduced a nil-rate band for taxation of interest payments for low earners. This proposal, also known as the abolition of the 10% savings tax, starts 6th April 2015.

jamesd

It's also unclear what the exact definition of interest will be. The new rules introduced last year included interest on funds that pay interest as their distributions rather than dividends, as well as some types of annuity. No way to know yet whether this year's change will use the same definitions as last year.

enthusiasticsaver

This is not even introduced yet as it will be from April 2016 PROVIDED it is voted in by the government of the day in the 2016 finance bill. As we do not yet know which government will be in power then I would imagine that the banks have not yet trained their staff as it may never happen. Incidentally interest on current accounts is treated the same as any other savings interest.

molerat

The OP will be referring to the 2015 changes for "low earners" rather than the proposed 2016 changes for all standard rate tax payers.

PeacefulWaters

Vortigern wrote: »

The proposal in the most recent budget may not be implemented till April 2016, but a previous budget introduced a nil-rate band for taxation of interest payments for low earners. This proposal, also known as the abolition of the 10% savings tax, starts 6th April 2015.

Fair point. I'd forgotten about that.

In which case the bank is not a tax adviser and it's upto the individual to register an R85 if they believe they are entitled to.

mgarl10024

I guess we don't know, but how would this work in practice?
Would all banks pay interest free of tax by default, and then it would be up to the individual to declare it (perhaps by a tax return), similar to how higher rate payers have to pay above the 20% tax on interest currently?

Kendall80

mgarl10024 wrote: »

I guess we don't know, but how would this work in practice?
Would all banks pay interest free of tax by default, and then it would be up to the individual to declare it (perhaps by a tax return), similar to how higher rate payers have to pay above the 20% tax on interest currently?

That is how I would expect it to work. Interest paid gross - individual declares if they receive over £1000.


With the proposed changes to the tax returns this could be very admin light too.

mgarl10024

Neil_John_Roberts wrote: »

I asked in my local Santander Bank if interest earned in a current account would be considered as savings and be eligible for the allowance. To my surprise they did not know.

http://www.bbc.co.uk/programmes/b055gbsv - first question, suggests any interest (regardless of current or savings) is eligible.