Santander 123

Moby

Thinking about opening this account....I am just unsure whether the two direct debit condition means that interest will only be paid on months that you pay out with these direct debits or is having them just set up on your 123 account enough?
Thanks

westy22

They must pay out once in a 12 month period so annual DDs are OK to meet the conditions. Just set them up in the account and all is good with regards to interest payments.

colsten

If you have DDs that qualify for cashback, it could make sense moving them to the 123.

Moby

Just a quick follow up...I'm aware savings accumulated inside an ISA do not have to be declared so don't affect your £10600 tax free allowance. I'm aware interest on savings accounts is taxed until spring next year...... but what about savings capital ...does this count as income... so will affect my tax free allowance in the way that ISA capital doesn't?

bowlhead99

The £10600 personal allowance is in relation to income tax. A tax on income. Capital is not income. The capital is your own money, which is being deposited or lent somewhere - it doesn't get taxed.

In this country we don't have a general wealth tax. So, while you might pay tax on £1000 of interest that you earn, the taxman does not care whether you earned that interest at a really high rate on £10,000 of 'savings capital' or a really low rate on £200,000 of 'savings capital'. The amount of money you've deposited in the savings account or current account has no effect on the personal income tax allowance you're entitled to, or the income tax that you pay on the total amount of income you have in excess of your allowance in a particular year.

N.B. "savings capital" is not a term in common use. Most people call it "savings". So if my answer doesn't make sense, perhaps you mean something else?

bigfreddiel

With a Santander 123 account there is an option via their online banking app to set the account to pay interest gross, I.e. Without tax taken off. Then you just declare it on your tax return in the untaxed interest section.

Cheers fj

Eco_Miser

bigfreddiel wrote: »

With a Santander 123 account there is an option via their online banking app to set the account to pay interest gross, I.e. Without tax taken off. Then you just declare it on your tax return in the untaxed interest section.

But you should not do that unless you expect that there will be no tax to pay.
From next April it is expected that all bank accounts will pay gross.

bigfreddiel

Eco_Miser wrote: »

But you should not do that unless you expect that there will be no tax to pay.
From next April it is expected that all bank accounts will pay gross.

Sorry, but you can do it, as long as you pay your tax at the end of the day.

And next tax year, 16,17 you can earn £1,000 tax free, any more than that then there will be tax to pay.

Cheers fj

2010

bigfreddiel wrote: »

And next tax year, 16,17 you can earn £1,000 tax free, any more than that then there will be tax to pay.

Cheers fj

How will you declare it if you don`t already get a self assessment tax form?

Moby

Sorry to come back but I'm uncertain whether it has to be two direct debits to qualify for interest or does setting up a standing order count as well as one of these payments out?

Stompa

Moby wrote: »

Sorry to come back but I'm uncertain whether it has to be two direct debits to qualify for interest or does setting up a standing order count as well as one of these payments out?

It has to be DDs.