Savings Tax (R85)

jayell

I am 63 (retired early) I have a small private pension of £11300pa.
I also have savings and some income from Shares. I am told my Personal allowance this year will be £15600. And so I have sent off some R85's. My problem is that I assumed that the income from shares, being taxed at source, was not taken into account. If this income from the shares makes me exceed the £15600 allowance will I be due to pay the savings tax after all. Thanks

molerat

Yes, if your total income (pension, interest [STRIKE]& dividends[/STRIKE]) exceeds £15600 then you cannot claim any savings interest tax free and will have to reclaim any overpaid tax at the end of the year or if all paid early on in the year it can be reclaimed earlier. https://www.gov.uk/apply-tax-free-interest-on-savings/tax-free-savings
https://www.gov.uk/income-tax

xylophone

I have a small private pension of £113000pa.

I would love a small pension like this.......:D

polymaff

jayell wrote: »

I am 63 (retired early) I have a small private pension of £113000pa.
I also have savings and some income from Shares. I am told my Personal allowance this year will be £15600. And so I have sent off some R85's. My problem is that I assumed that the income from shares, being taxed at source, was not taken into account. If this income from the shares makes me exceed the £15600 allowance will I be due to pay the savings tax after all. Thanks

Your highlighted advice received is completely wrong. Even in the correct context, the £15,600 figure is as bogus as those "up to" claims for broadband.

Assuming your pension is actually £11,300 p.a. and not as you've stated, £700 of that will be taxable. That means that, unless you are registered blind, you fail the very first test on the R85 application form:

"Is your income likely to be below your annual taxfree allowance? ... If Yes, please complete this form. If No, please do not complete this form as you are not eligible to receive interest in this way."

jayell

Oops £11300pa

jayell

I thought this year PA was £10600 + £5000 for savings. So 11300-10600=£700 taxable income as you say but that would leave £4300 saving + dividends. But dividends are non-returnable taxed. I take it from the earlier post that i have got "the wrong end of the stick" Thanks

polymaff

jayell wrote: »

I thought this year PA was £10600 + £5000 for savings. So 11300-10600=£700 taxable income as you say but that would leave £4300 saving + dividends. But dividends are non-returnable taxed. I take it from the earlier post that i have got "the wrong end of the stick" Thanks

Entirely. As I suggested, figures are being thrown around in a most disreputable way. Leaving aside the effect of claiming the blind person's allowance, your personal allowance is, in 2015/16, £10,600. If your pension, plus any other non-savings income, comes to £10,601 then you pay tax - and R85s are completely verboten. Just like there was the occasional Lucky Joe who really got 8Mbps ADSL, there is a special set of conditions where you would be able to have an income of £15,600 and pay no tax. Next year, the snake-oil salesmen will be able to feed you a significantly higher but even more unrepresentative figure!

EDIT: At least by 2016/17, R85s should be history

xylophone

See http://www.taxvol.org.uk/about-tax/entitled-10-band-savings-interest/

"Eligibility for signing the R85 depends on the savings income. If all of the savings income falls within the available amount of the £5,000 band then an R85 can be signed."

See also http://www.coventrybuildingsociety.co.uk/pdfs/R85_form.pdf

xylophone

allowance, your personal allowance is, in 2015/16, £10,600. If your pension, plus any other non-savings income, comes to £10,601 then you pay tax - and R85s are completely verboten. Just like there was the occasional Lucky Joe who really got 8Mbps ADSL, there is a special set of conditions where you would be able to have an income of £15,600 and pay no tax. Next year, the snake-oil salesmen will be able to feed you a significantly higher but even more unrepresentative figure!

See Govt guidance here but read £10,600 for £10,500 (and there is a new R85 for 2015-16 see link above).

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/293747/Fact_sheet_template_-_10__tax_9.pdf

polymaff

xylophone wrote: »

See http://www.taxvol.org.uk/about-tax/entitled-10-band-savings-interest/

"Eligibility for signing the R85 depends on the savings income. If all of the savings income falls within the available amount of the £5,000 band then an R85 can be signed."

See also http://www.coventrybuildingsociety.co.uk/pdfs/R85_form.pdf

Yes, I'm wrong on the R85 issue. There is a special R85 for tax year 2015/16. My apologies, Jayell. I was repeating advice I'd given in previous years - and there is a special R85 application form for 2015/16 But the rest is right, your Personal Allowance is £10,600 and you will pay tax - even if your total income is £15,600 or less.

As regards dividends, Jayell, up to and including 2015/16, generally, no dividend income is considered when computing non-savings and savings income tax. This three-step approach ends next year when - at least as anounced by HMRC last week - the PSA - personal savings allowance - will depend upon dividend income. It is not set in stone until the enabling legislation is passed and I hope that they reconsider.

jayell

One of the bits I dont get is this from The Coventry BS link
"Other taxable income – include rental income. 'Do not include Student
Loans or Dividends for the purposes of this form.'"

Do you include Dividends or not!

I have withdrawn most of the R85's now. it is just TOO confusing.