Gross Interest

JW003

Hi Everyone


I have been trying to confirm some info re getting gross interest on savings but my bank have been unable to give a definitive answer and HMRC appear to be very difficult to get through to, so I was hoping someone on here may be able to help.


I currently work part-time while studying, meaning my income is below the tax threshold and I don't pay income tax. However earlier this year (before the start of the new tax year in case this is significant), I was fortunate to be given some money by a relative. This was essentially inheritance but my relative wanted to give this to family members while they are alive.


As I understand it I am eligible for gross interest on savings because my annual income remains below the threshold and the other money is a 'one off' that would have no bearing on eligibility for this type of thing, but was wondering if anyone could give me confirmation on this? I am aware of some different rules around inheritance of 325k or more- the sum was far below that although it is 5 figures.


Many Thanks in advance

badger09

There is no gift tax in the UK, so the gift itself is tax free in your hands.

There could be Inheritance Tax implications for the donor, but that is not your concern.

JW003

That's great, thank you for the quick reply

Archi_Bald

Again, not your concern but your relative should make sure they understand the rules relating to deprivation of assets.

InvestInPoker

Specifically regarding getting gross interest on the amount in your savings accounts :-

Yes you can use your personal allowance towards this if you do not use it all up. It is very easy to get, just phone your bank and tell them you want to register xxx account for gross interest. In the past they would have sent you an "R85" form to fill out (which is very simple you just sign you are a non tax payer and send it back). This might still happen but sometimes nowadays you can make the declaration over the phone and no signature needed.

soulsaver

Assuming interest earned on your savings plus your income from working (and BTL income, ftaod) is below £16000 you can request gross interest payments from your bank(s).

bigfreddiel

soulsaver wrote: »

Assuming interest earned on your savings plus your income from working (and BTL income, ftaod) is below £16000 you can request gross interest payments from your bank(s).

Absolutely correct, my wife does this, but this extra £5k is for this tax year only.

Just ask your bank or building society to pay the interest gross.

If they can't then get yourself a self assessment form from the tax office. It's easy to fill in, if you keep accurate records. Takes me about 10 minutes each year. Each year I get a rebate of about £300 because I have two pensions, a part time job and bank interest. Despite the interest being gross the good old tax man still gets it wrong and gives me back some money.

Good luck fj

bigfreddiel

I should have mentioned move your savings into an ISA and you have no need to worry about tax
fj

grey_gym_sock

bigfreddiel wrote: »

Absolutely correct, my wife does this, but this extra £5k is for this tax year only.

this came up a while back. i thought the conclusion was that the extra £5k was continuing (though there was an MSE article that seemed to imply that it wasn't).

Eco_Miser

bigfreddiel wrote: »

I should have mentioned move your savings into an ISA and you have no need to worry about tax
fj

But for someone who wouldn't be paying tax anyway this is pointless, and will earn a lower interest than a good current account.