Are Regular Savers now Tax-Free?

Mishomeister

As from next April savings accounts will become tax-free for most people does this means it would be a good trategy to open as many regular savers(with good interest) as possible now and as they will mature after next April no tax wil be paid on entire interest earned?

Or is there still going to be some tax taken for the interest earned prior to next April?

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

xylophone

Tax is deducted when interest is credited.

Assuming that the interest will be credited after next April, it is expected that no deduction will be applied.

http://www.telegraph.co.uk/finance/personalfinance/savings/11600863/Savings-trick-act-now-to-get-20pc-boost-on-savings-interest.html

molerat

We have just opened our TSB monthly savers and was about to put in the R85s then thought about it

Aretnap

It's not entirely tax free of course - if your total interest next year exceeds the personal savings allowance you'll have to declare the extra and pay tax on it. With interest rates of up to 6% available it won't actually be that difficult to exceed the limit with a few regular savers, especially if you're a higher rate taxpayer.

But yes, that aside it's the date the interest is payed that matters, so there's now a big tax incentive to choose accounts which won't pay interest until after next April.

bigfreddiel

Aretnap wrote: »

It's not entirely tax free of course - if your total interest next year exceeds the personal savings allowance you'll have to declare the extra and pay tax on it. With interest rates of up to 6% available it won't actually be that difficult to exceed the limit with a few regular savers, especially if you're a higher rate taxpayer.

But yes, that aside it's the date the interest is payed that matters, so there's now a big tax incentive to choose accounts which won't pay interest until after next April.

For tax yr 15/16 if your earnings including interest can be as much as £15,000 approx before you pay any tax

For 16/17 tax year you can earn £1,000 tax free if you're a standard rate tax payer, an £500 if a higher rate.

Fairly straightforward

Cheers fj

MDMD

I worked out for me my 2x TSB current account plus the standard crop of FD, HSBC, M&S and TSB regular savers will give me £593 approx.

So for me it doesn't make sense to keep any more, except possibly my Lloyds Club as I'm a 40% taxpayer so I get a better return by sticking it in my pension.

Even considering ditching the Halifax reward as £3.75 is all I'll end up with from there.

veryintrigued

bigfreddiel wrote: »

For tax yr 15/16 if your earnings including interest can be as much as £15,000 approx before you pay any tax

For 16/17 tax year you can earn £1,000 tax free if you're a standard rate tax payer, an £500 if a higher rate.

Fairly straightforward

Cheers fj

A few limited worked examples in the link below and also confirmation that:

from April 2016, you won’t have to
pay tax on your interest if your taxable income is
less than £16,800.

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

Pincher

I fully expect some banks will deduct the interest out of habit, and you end up having to claim it back.

If I was George Osborne, that's how I would have it.
Exploiting ignorance, inertia, and sheer laziness,
he will get to keep lots of tax on interest, without lifting a finger.

In fact, if you did make £1,200 in interest, and no tax was deducted, who would bother filing and paying £40?

Archi_Bald

Pincher wrote: »

I fully expect some banks will deduct the interest out of habit, and you end up having to claim it back.

banks don't generally do things "out of habit". It's account holders that do.

Pincher wrote: »

In fact, if you did make £1,200 in interest, and no tax was deducted, who would bother filing and paying £40?

HMRC will know exactly how much interest you received. You may find that they will collect any tax on due on it from you anyway, and possibly with a fine on top. It seems stupid to try and outsmart the taxman.

badger09

Archi_Bald wrote: »

banks don't generally do things "out of habit". It's account holders that do.

HMRC will know exactly how much interest you received. You may find that they will collect any tax on due on it from you anyway, and possibly with a fine on top. It seems stupid to try and outsmart the taxman.

Or the taxwoman:p:rotfl:

Pincher

Archi_Bald wrote: »

HMRC will know exactly how much interest you received. You may find that they will collect any tax on due on it from you anyway, and possibly with a fine on top. It seems stupid to try and outsmart the taxman.

If they did not deduct tax currently, you really think people will get off their butt and file and pay the tax due? Note that the tax due is not that clear cut, as it depends on the other income using up the personal tax free allowance.

In fact, if they actually stopped deducting tax, I expect a whole load of "I'm not interested" people will suddenly get a warning letter from the HMRC, followed by millions of calls swamping an under staffed call centre, as usual.

"Can you talk me through this form, I have an hour? Oh no, I've held on for 30 minutes already."

"Oh, I forgot I had that account, they don't send paper statements any more."

"So, account A is £23.50, account B is £35.31, Account C is.......... so the total is £142.11."