The new tax free savings allowance

Eco_Miser

joe134 wrote: »

It was your 'nearly all' that I was referring to. Who's figures are these 95%.? Some thing tells me it's wrong. As an OAP, who are the majority of Account holders, I fall into the above £16.5 k group and will pay tax on interest still, and know umpteen others. I'm not being pedantic, but , just don't believe all the figures regarding this subject.

I believe it was the Chancellor who said his measures would remove 95% from paying tax on interest.

As a pensioner myself, I don't pay income tax, and have no expectation of doing so.

Are you saying you receive £16.5k interest?
If £16.5k is your total income, you won't be paying tax on interest, though you may pay some on your pension.

Note the £1000 allowance coming in in 2016/7 doesn't widen the £5000 zero-rate savings band introduced in 2015/6, it's available right up to the top of the basic rate band (and £500 throughout the higher rate band).

jimjames

FOREVER21 wrote: »

I take your point about AER, the meaning of which I am very familiar. The point of my posts was the actual return on a 6% regular saver if you read them again you will see I never mentioned AER

If you read my post #19 you will see I quote the actual interest earned again no mention of AER.

Yet in another post you say

FOREVER21 wrote: »

the actual interest overall paid is half the advertised rate ie 3% with this one.

It still doesn't make sense though. The rate is 6% which is paid on the money in the account for the time it is in. Why would a bank pay interest on money that isn't in the account? All the money in the account receives 6%, no money earns 3%.

How does a mortgage rate work? Can I tell the bank that because I paid off part of the balance during the year that my mortgage rate should be lower?

I might pay less interest once the balance reduces but the rate is still the same. It's no different with regular savers.

jimmyboy420

Thanks for the random diversion into AER etc, which is not something I'm in any doubt over.

joe134 wrote: »

We aren't in agreement in respect of tax, I knew it was year end, but,your OP, was about, tax free, interest.on RS, which is the same, year end;;irrespective of the rate given.
At the end of the year, whether you pay tax monthly, or, annually, or, whatever, the tax implications are the same, ;
The tax will be assessed over the year, and you will pay 20% of earned income, minus your allowances, at year end.You may be able to jiggle a few pounds extra by, shifting it from A>B ,as Aretnap has stated, but, you cannot alter the tax to be paid in that year.

I've become convinced you either don't understand my question, or just aren't very good at communicating.

For an average person earning income in basic or higher rate tax bands, if interest is paid monthly on a regular saver started on 8th April this year, then throughout 2015/16, tax will be due, but if it's paid annually on 8th April 2016, it won't. In this respect the difference between monthly and annual interest is significant for tax purposes.

colsten

jimmyboy420 wrote: »

..... but if it's paid annually on 8th April 2016, it won't.....

provided that the next government doesn't scrap the plan

BookerTee

jimjames wrote: »

It still doesn't make sense though. The rate is 6% which is paid on the money in the account for the time it is in. Why would a bank pay interest on money that isn't in the account? All the money in the account receives 6%, no money earns 3%.

How does a mortgage rate work? Can I tell the bank that because I paid off part of the balance during the year that my mortgage rate should be lower?

I might pay less interest once the balance reduces but the rate is still the same. It's no different with regular savers.

Perhaps if we just call the 6% regular saver as equivalent to a 3% fixed rate account?

Eco_Miser

BookerTee wrote: »

Perhaps if we just call the 6% regular saver as equivalent to a 3% fixed rate account?

But it isn't. The rate is 6% AER. The average balance is about half of the final balance - that's where the return is half what some people expect, not in halving the rate.

joe134

eskbanker wrote: »

For someone questioning the source and veracity of figures, where did you get THAT one from?!

See post below, and tell me if youngsters have these( A/cs.)sssss?? and they aren't all of them;;
Oap's are more likely to have a bank account with the money to pay income tax on interest than any other age group, and that's not from the Chancellor. He is always saying that the smaller young group are paying the pensions of the larger Oap group. and cannot go on;;Cannot have it both ways. I'm forever helping my kids/grandkids with money, and know umpteen of my friends ,(Oaps) who are, so goes without saying, we are the group with more bank accounts with tax on interest.I always pay tax on my interest, sometimes use R40 to get some back, and am always trying to keep the wife just under the tax threshold, ( not succeeded last 2 years ) as she has all her A/cs registered gross.Very difficult to accurately guage the amount you are" going" to get,in advance. ;
This new allowance should help.Before anyone BUtts in, she has ALL her Isas too, from day one.over 100k.(both of us ) I still say we OAP's have the money, because we save.AND we make up more than 5% of the saving population.MY figures, not Chancellors.Believe his and you are in trouble.:rotfl:

joe134

Eco_Miser wrote: »

I believe it was the Chancellor who said his measures would remove 95% from paying tax on interest.

As a pensioner myself, I don't pay income tax, and have no expectation of doing so.

Are you saying you receive £16.5k interest?
If £16.5k is your total income, you won't be paying tax on interest, though you may pay some on your pension.

Note the £1000 allowance coming in in 2016/7 doesn't widen the £5000 zero-rate savings band introduced in 2015/6, it's available right up to the top of the basic rate band (and £500 throughout the higher rate band).

Hi Eco, we seem at crossed purposes somehow.:(
3x santander 123 a/cs = £60 k
3xLloyds vantage =£15k
3 x TSB Enhance =£15k
3 x BOS vantage= £15k
2 x 65 + NS & i bond = £20k + index linked £15k
1 lloyds club = £4k
= £140k
+ N/Wide, 3>5% Acs et.al
These are not all of my wifes Acs, and guess most on this thread , GIVING advice have them too.:o
Soon over the threshold for tax , even with the new allowances, and extra £1k in 16>17. with these types of a/cs.and her pension on top.My wages are way above the £16.5 k, and have similar Acs, so pay tax at source on my interest.And I don't class myself out of the mainstream Oap.:) I'm a shilling short of most on here:rotfl: mostly oap's I presume
ERR;;and forgot, our Full compliment of Isas, Toisa, and other tax free a/cs.Leave others, with better grasp of figures than me, to work out the amount.;):beer:PS;; that's before rates rise:-)

eskbanker

joe134 wrote: »

Oap's are more likely to have a bank account with the money to pay income tax on interest than any other age group, and that's not from the Chancellor. He is always saying that the smaller young group are paying the pensions of the larger Oap group. and cannot go on;;Cannot have it both ways. I'm forever helping my kids/grandkids with money, and know umpteen of my friends ,(Oaps) who are, so goes without saying, we are the group with more bank accounts with tax on interest.

I don't really think that you're in a position to be criticising other posters for unverified figures when you're using that sort of unsupported leap of logic to try to make your own case!

joe134 wrote: »

I still say we OAP's have the money, because we save.AND we make up more than 5% of the saving population

That's quite a difference from being in the majority now down to 'more than 5%'!

Given this credibility gap I'd humbly suggest that you follow the usual advice to those in a hole, i.e. stop digging!

joe134

eskbanker wrote: »

I don't really think that you're in a position to be criticising other posters for unverified figures when you're using that sort of unsupported leap of logic to try to make your own case!

That's quite a difference from being in the majority now down to 'more than 5%'!

Given this credibility gap I'd humbly suggest that you follow the usual advice to those in a hole, i.e. stop digging!

Facts are stranger than fiction,oh fountain of knowledge.:beer:spades away.