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Are Regular Savers now Tax-Free?
Comments
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It is an interesting point because there are a number of very popular and well established P2P platforms, and these do not deduct income tax at source. Presumably all those lending through Zopa, Ratesetter et al. will be in this position, so I wonder what has happened in that case.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.0 -
Just a question... do people that earn under £100k, but above the 40% rate threshold, (that therefore don't therefore need to fill in Self Assessment) but should be paying 40% tax instead of 20% that is currently deducted actually contact HMRC to pay the extra 20% tax that they've not paid?0
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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."
Seems you have not heard about the Personal Tax Account (PTA)? There is no need for millions of calls swamping an under staffed call centre, as you put it.
The PTA will contain all the interest an individual has been paid. Banks are already reporting all interest to the HMRC.0 -
It is an interesting point because there are a number of very popular and well established P2P platforms, and these do not deduct income tax at source. Presumably all those lending through Zopa, Ratesetter et al. will be in this position, so I wonder what has happened in that case.
I was a fairly early adopter at Zopa, in November 2006.
As I have never been required to submit a SA Return, I simply write to HMRC every year with details of untaxed interest received on Zopa loans and my tax code is adjusted so that I pay the correct tax on it.
In reply to Pincher's question - yes I metaphorically 'get off my butt' and 'pay the tax due'.
I have very detailed, first hand experience of HMRC Enquiries (or Investigations as they used to be known) and I don't want to be the subject of one;)0 -
Archi_Bald wrote: »Seems you have not heard about the Personal Tax Account (PTA)? There is no need for millions of calls swamping an under staffed call centre, as you put it.
The PTA will contain all the interest an individual has been paid. Banks are already reporting all interest to the HMRC.
If Tesco deducts £20 of tax from my 3% interest current account, I expect them to give it to HMRC, with my NI number attached. I don't expect them to donate it to charity. If you call it PTA, fine.
Since tax is currently being deducted by default, there is no need to get off your butt, or call HMRC.
I am talking about the opposite scenario, where no tax is deducted for any account, which is possible if they assume most people have trivial interest income, under the £1,000 tax free regime from April 2016. In fact, for 2014/15, I am under £1,000.
The thing is, as BOE rises, a person who gets 1.5% this year can be getting 4% in two year's time, and pass through the £1,000 threshold quite unawares.
If they do indeed stop deducting tax by default, they are storing up an admin chaos ahead. People who hitherto were happily leaving things alone, not claiming back trivial amounts of overpaid tax will technically be evading tax by not pro-actively paying tax.
If they deduct tax, and you are lazy, you lose a little tax you didn't claim back.
If they don't deduct interest, and you are lazy, you could get fined.
I prefer the one where I don't get fined.0 -
unacceI reckon you have your own theories that have nothing much to do with reality. Not that you are known for that.
what makes you think Tesco would donate tax dues to charity?If Tesco deducts £20 of tax from my 3% interest current account, I expect them to give it to HMRC, with my NI number attached. I don't expect them to donate it to charity.
did you read the link Archi provided? If you did, you would know that the PTA is yet to be introduced.If you call it PTA, fine.
well, speak for yourself. Those on higher or advanced tax rate do need to declare their income from interest as they have to pay additional tax on it. That's been so for considerable number of years.Since tax is currently being deducted by default, there is no need to get off your butt, or call HMRC.
so did Archi Bald, I believe.I am talking about the opposite scenario, where no tax is deducted for any account, which is possible if they assume most people have trivial interest income, under the £1,000 tax free regime from April 2016.
that's where the PTA comes in to help those who "are unaware" that they received more than £1,000 (or £500) in interest (nb. there's a snowball's chance in hell that 1.5% turns into 4% over the next 2 years). "Being unaware" has, btw, never been an [STRIKE]un[/STRIKE]acceptable reason for not paying the tax that's due.The thing is, as BOE rises, a person who gets 1.5% this year can be getting 4% in two year's time, and pass through the £1,000 threshold quite unawares.
perhaps you should be offering your input to the ongoing development of the PTA, to avoid the admin chaos you predict?If they do indeed stop deducting tax by default, they are storing up an admin chaos ahead. People who hitherto were happily leaving things alone, not claiming back trivial amounts of overpaid tax will technically be evading tax by not pro-actively paying tax.
Half baked assessment.If they deduct tax, and you are lazy, you lose a little tax you didn't claim back.
If they don't deduct interest, and you are lazy, you could get fined.0 -
"Being unaware" has, btw, never been an unacceptable reason for not paying the tax that's due.
I suspect it has virtually always been an unacceptable reason on the basis that "ignorance of the law is no excuse...."0 -
You guys are hardly going to be aware.
Who would expect the HMRC NOT to have a reporting mechanism from the savings institutions? Just trust people that they will volunteer their interest income? That'll be the day.
The gap is simply the people who are not used to filing taxes suddenly being confronted by the need to do it, even in a simpler form. All those people who have been moaning about low interest rates since 2009 are the ones with significant deposits.
On 1%, £50k generates £500, on 2%, it generates £1,000.
Unless you expect these people to have used up their cash and starved to death, and interest rate will never rise, which is another form of lack of reality, not deducting tax will affect them.0 -
Only ~10% of the UK population has £50k or more in savings. I wonder what proportion of those are filling out tax returns anyway - most, I'd imagine. Your figures are irrelevant to the other 90% of the population, especially the 75% who have £10k or less in savings. For the majority of people, the savings interest allowance will cover them even if rates return to previous levels.On 1%, £50k generates £500, on 2%, it generates £1,000.
Unless you expect these people to have used up their cash and starved to death, and interest rate will never rise, which is another form of lack of reality, not deducting tax will affect them.
Who is it you are suggesting is suffering from a lack of reality?
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. Thanks for picking it up. This discussion has been closed.
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