'Personal Savings Allowance.

Oldbiggles

:money:

I’ve just read Martin’s article on the proposed ‘personal savings allowance’. But I would like to know whether we have to claim this allowance or will the building societies, banks etc. pay this full interest automatically?

Steve_xx

Interest will be paid gross and you will have to declare to HMRC if you are due to pay any tax, ie if you earn more than 1k in interest in the tax year.

chris_m

I'm pretty sure (*) you have to claim it. Otherwise how will the banks & building societies know whether or not to deduct tax

(*) Haven't looked into it in any great detail as yet because I know I won't qualify this year - but I have it noted since, if my plans come to fruition, I will do next year.

noh

chris_m wrote: »

I'm pretty sure (*) you have to claim it. Otherwise how will the banks & building societies know whether or not to deduct tax

(*) Haven't looked into it in any great detail as yet because I know I won't qualify this year - but I have it noted since, if my plans come to fruition, I will do next year.

"From April 2016 banks and building societies will stop automatically taking 20% in income tax from the interest earned on your non-ISA savings."

See https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/414026/Savings_factographic_final.pdf

masonic

It is believed that if this comes into effect in the next tax year, the banks will probably stop deducting income tax from savings and those who have a liability will need to make a declaration to HMRC.

Biggles

For people who submit a self-assessment return, this just means 'no change', ie we will continue to enter interest, net and gross, on our returns and it will be taken into account when our tax is calculated.

noh

Biggles wrote: »

For people who submit a self-assessment return, this just means 'no change', ie we will continue to enter interest, net and gross, on our returns and it will be taken into account when our tax is calculated.

Not quite, as there will no longer be a net amount to enter. All interest will be paid gross.

Archi_Bald

Oldbiggles wrote: »

I’ve just read Martin’s article on the proposed ‘personal savings allowance’. But I would like to know whether we have to claim this allowance or will the building societies, banks etc. pay this full interest automatically?

Don't know which article you read but you can use the following HMRC calculator to work out whether you have to pay tax on your savings in 2015-16

http://www.hmrc.gov.uk/tools/r85/r85-2015.htm

For the proposed change in 2016-17, see this: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/414026/Savings_factographic_final.pdf. Note this isn't cast in stone, and I have seen nothing in the Labour Manifesto to confirm that Labour would implement this proposal.

Oldbiggles

Archi_Bald wrote: »

Don't know which article you read but you can use the following HMRC calculator to work out whether you have to pay tax on your savings in 2015-16

The article I referred to which I’ve copied below was in the Telegraph and attributed to Martin Lewis. As you can see he spells out the new tax rules regarding interest on savings but I’m still not clear how building societies, banks etc. will know how to calculate whether a saver is a 20% tax payer or a higher rate payer unless of course we are required to notify them ourselves.
MARTIN LEWIS ARTICLE
“In the Budget the Chancellor announced that for basic 20pc-rate taxpayers, from April 2016 the first £1,000 interest earned in banks, building societies, credit unions and peer-to-peer lenders will not be taxed (£500 for a 40pc higher rate taxpayer, and additional 45pc-rate taxpayers don’t get it at all) – giving a £200 maximum annual tax reduction for everyone who qualifies.”

xylophone

http://www.thisismoney.co.uk/money/saving/article-3010018/Has-Chancellor-George-Osborne-s-radical-Budget-reform-killed-cash-Isa.html

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/414026/Savings_factographic_final.pdf

Tax will not be deducted - if you know that you have underpaid, the onus will be on you to advise HMRC.

Oldbiggles

Thanks folks!
I knew the answer must be out there so thanks for pointing me in the right direction.
Pity we have to wait another year though for it start…That’s if the next Gov’t doesn’t cancel it.


:beer: