Unsure about tax position

Roberta1

I am currently a non tax-payer. In the tax year 15/16 I will earn approx. £10k. I know the tax free allowance is £11,100.

This year, due to an inheritance which I will be putting in a savings account, my savings interest might tip me just over that £11,100 amount.

Currently I receive all my savings tax-free.

So, how do I pay the tax on the £100 or so over the limit I will be? I don't want to change my tax code as this situation is for this year only. (As soon as we get to April I will move the inheritance to an ISA - I can't do that now as I have used my ISA inheritance for this year).

So, my ideal scenario is that I ring IR in April and pay the small amount of tax owed as a one-off payment.

Is that how it should work?

Many thanks
R.

jem16

Roberta1 wrote: »

I am currently a non tax-payer. In the tax year 15/16 I will earn approx. £10k. I know the tax free allowance is £11,100.

Tax free allowance is £10,600.

This year, due to an inheritance which I will be putting in a savings account, my savings interest might tip me just over that £11,100 amount.

Currently I receive all my savings tax-free.

So, how do I pay the tax on the £100 or so over the limit I will be? I don't want to change my tax code as this situation is for this year only. (As soon as we get to April I will move the inheritance to an ISA - I can't do that now as I have used my ISA inheritance for this year).

You also have a £5000 tax free savings allowance which you will be able to utilise as your earnings are low.

So you're well within your tax free allowance and no need to pay tax.

Roberta1

[QUOTE=jem16;69271130
You also have a £5000 tax free savings allowance which you will be able to utilise as your earnings are low.

So you're well within your tax free allowance and no need to pay tax.[/QUOTE]

Does that mean I can have a max of £5000 savings tax free, or a max of £5000 tax free interest?

How is this set up i.e. how do the savings providers/Inland Revenue how much savings and/or savings interest I have?

jem16

Roberta1 wrote: »

Does that mean I can have a max of £5000 savings tax free, or a max of £5000 tax free interest?

Tax free interest.

How is this set up i.e. how do the savings providers/Inland Revenue how much savings and/or savings interest I have?

If you have already completed an R85 form to have your interest paid gross, nothing will change. You will still get it paid gross.

The banks will usually send the info on your interest to HMRC but there's no need for you to do anything.

More info here;

http://www.moneysavingexpert.com/savings/tax-free-savings