First £1000 tax free query?

martin57

Hi folks,


My income is less than £15k occupational pension and taxable ESA benefit.


I have rang my bank to ask them about the new rule as regards £1000 tax free on interest on savings but it seems that the only way possible to do this on their system is for them to register me as a non-tax payer. I have told them that I am a tax payer but it seems this is the only way they can do it, so that is what they have done


They then said that I should maybe contact HMRC to check.


Does all of this seem right to you?


thanks for info.


martin57

CLAPTON

martin57 wrote: »

Hi folks,


My income is less than £15k occupational pension and taxable ESA benefit.


I have rang my bank to ask them about the new rule as regards £1000 tax free on interest on savings but it seems that the only way possible to do this on their system is for them to register me as a non-tax payer. I have told them that I am a tax payer but it seems this is the only way they can do it, so that is what they have done


They then said that I should maybe contact HMRC to check.


Does all of this seem right to you?


thanks for info.


martin57

are you saying that your total gross income including (gross) interest is less than 15,600?

molerat

The "£1000 tax free" is from the 2016/17 tax year. This year you can, with a 1060L tax code, earn a total of up to £15600 (or £16660 with partner's 10%) tax free. What is your total income breakdown ?

martin57

Thanks for replies.


I thought that the £1000 tax free on interest if from this year?
So I am mistaken on this, gross taxable occupational pension and ESA benefit (contribution based) is over £14K


So the new £1000 tax free on interest is definitely from 16/17?


Thanks
Martin57

molerat

Yes, def next year. As above, you can get up to £5000 interest tax free. So with a tax allowance of 10600 :
10600 + 5000 = 15600 - 14000 = £1600 tax free interest. If your total income including interest is less than your tax code + £5000 then you can submit an R85 as you are a "non taxpayer" for bank interest as far as the system is concerned. I pay income tax but do not pay tax on my bank interest.

CLAPTON

martin57 wrote: »

Thanks for replies.


I thought that the £1000 tax free on interest if from this year?
So I am mistaken on this, gross taxable occupational pension and ESA benefit (contribution based) is over £14K


So the new £1000 tax free on interest is definitely from 16/17?


Thanks
Martin57

if your income excluding interest is 14,000 then you have a interest tax rate for 15,600 - 14,000 = 1,600 at 0% tax

so depending upon how much interest you are likely to earn, you may be able to ask for it gross

martin57

Thanks a lot folks for all replies. After doing some further calculations I find that it will be under £15600 just, maybe about £30 or £40, total amount of my income and savings interest. Its a fixed rate account so that is why I am able to do a fairly precise calculation

I have contacted my bank and they are going to give me the interest tax free.

At the same time say in the unlikely event that the total income including savings interest was say £15640 could this create a lot of hassle with the tax man, me applying now and 99.99% certain that it will be under £15600, and getting the interest tax free in the current year?

Thanks
martin57

bowb

Hmrc site states that banks and building societies etc will STOP deducting tax automatically from interest made on savings. From april 2016. So i guess if you earn more than £1000 interest you may have to pay any tax via SA or TAX CODE