We'd like to remind Forumites to please avoid political debate on the Forum. This is to keep it a safe and useful space for MoneySaving discussions. Threads that are - or become - political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.

Tax on savings

My wife and I are approx. same age. she will be retiring next july at age 60 without a company pension but has and is, paying voluntary class 3 contributions. As she currently is a none tax payer will she be required to pay tax on her savings if her state pension is approx. £80.00 per week

Comments

  • jem16
    jem16 Posts: 19,491 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    It all depends on how much interest she will be earning on her savings.

    £80 pw is £4160 per year. Personal allowance at age 60 is £5225 so she still has £1065 or personal allowance left over. If her gross savings interest is less than this then no she doesn't have to pay tax.
  • Thanks jem,
    At present the savings interest is well below £1065 but as I will be taking early retirement with a lump sum, I was thinking about depositing some or all of this in her account. - thoughts?
  • jem16
    jem16 Posts: 19,491 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    All depends on the size of the lump sum.

    You may also find that sticking it all in a savings account would not be the best place for it.
  • jem, approx £55k
  • McSaver
    McSaver Posts: 609 Forumite
    Dont forget to use your ISA limits each year as they are tax-free efficient and doesn't have to be declared in what you earn.
    Had £80,000 in Savings - All GONE!!! BYE BYE
    :A Single, 27, Aspie, Gooner :A
  • jem16
    jem16 Posts: 19,491 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    jem, approx £55k

    Put in a savings account at 6.3% that would give her gross interest of £3465. Add this to the £4160 pension and she has taxable income of £7625.

    First £5225 tax free
    Next £2230 at 10% = £213
    Next £170 at 20% = £34

    Total is £247. Plus 20% of whatever other savings income she has.

    You should of course utilise ISAs and perhaps even NS&I index-linked certificates - both of which are tax-free savings.

    Are you sure you want to save the £55k? You could also consider investing the £55k if you are happy to tie it up for at least 5 years. You could use it to provide an income of around 5% pa and still have the capital grow.
  • Thanks for the info jem.
This discussion has been closed.
Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 348.2K Banking & Borrowing
  • 252.1K Reduce Debt & Boost Income
  • 452.3K Spending & Discounts
  • 240.7K Work, Benefits & Business
  • 617K Mortgages, Homes & Bills
  • 175.6K Life & Family
  • 253.9K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16K Discuss & Feedback
  • 15.1K Coronavirus Support Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.