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Tax on savings

keith_parke
Posts: 11 Forumite
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
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Comments
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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.0 -
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?0 -
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.0 -
jem, approx £55k0
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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 :A0
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keith_parke wrote: »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.0 -
Thanks for the info jem.0
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