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2016 no tax on first £1000 interest earned
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Carnival789 wrote: »Just to throw this into the mix - presumably the monthly £5 from halifax will be exempt from being part of our annual interest totals?
either way, I'm not looking forward to having keep a record of all interest payments received throughout the year (and then having to fill out forms etc for the self-declaration part). Oh well, I will just have to think of the money it's saved me overall !This will be paid each month if you pay in £750 or more, pay two different direct debits and remain in credit throughout the previous calendar month. This payment is ‘net’ of income tax, which means we pay it after taking off income tax at the rate set by law (currently 20%). If you’re a higher-rate taxpayer you may have to pay extra income tax on the reward payment. The gross amount is £6.25 - this is the amount before income tax is taken off.
You won't need to declare anything if you earn less than £1000 interest. I presume your not a HRT payer if you don't declare now.0 -
£6.25 would be nice! yes, I'm on the basic tax rate up my interest on savings will be over the £1k mark so it looks like I'll be going down the self assessment route next year.
When it comes to the joint 123 current account that I'm a party of, would I be correct in thinking I just add 50% of interest earned on that account into the equation?
Gadget mind- can I ask what you meant when you said I could get my tax code tweaked? I thought tax codes were set in stone!0 -
Yes it seems to be treated as interest, see http://www.halifax.co.uk/bankaccounts/current-accounts/reward-current-account/
So it should be £6.25 monthly reward after April!
You won't need to declare anything if you earn less than £1000 interest. I presume your not a HRT payer if you don't declare now.
The Halifax Reward is not interest. It is what HMRC call an "annual payment"
http://www.hmrc.gov.uk/manuals/saimmanual/saim8020.htm
http://www.hmrc.gov.uk/manuals/saimmanual/saim9120.htm
It is taxed as income as your link states.
I have not seen anything yet to suggest that it will be paid gross from next year.0 -
Carnival789 wrote: »Gadget mind- can I ask what you meant when you said I could get my tax code tweaked? I thought tax codes were set in stone!0
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The Halifax Reward is not interest. It is what HMRC call an "annual payment"
http://www.hmrc.gov.uk/manuals/saimmanual/saim8020.htm
http://www.hmrc.gov.uk/manuals/saimmanual/saim9120.htm
It is taxed as income as your link states.
I have not seen anything yet to suggest that it will be paid gross from next year.
These articles would seem to contradict you - they imply the reward payment is treated as interest. The Halifax don't seem to say anywhere.
http://www.thisismoney.co.uk/money/saving/article-3023407/Could-Halifax-Reward-customers-savings-tax-Budget-giveaway-snaffled.htmlThe payment is termed a 'reward' but the taxman sees it the same as any other interest, and savings tax is payable on it.
Also this thread on TMF would seem to imply it's interest:
http://boards.fool.co.uk/bank-interestreward-11886099.aspx?sort=whole0 -
That is what, in theory, is supposed to happen when the new Personal Tax Accounts are introduced. All earnings, pensions, savings interest etc will be automatically pre-populated into the account.
If, of course, they can ever get the IT to work!
Well they definitely have RTI working for PAYE - tax credits keep getting our income wrong because they get the RTI monthly and then forget about the personal pension contributions that we make (which aren't covered by RTI).
I suspect this probably will end up working, but it will take a while and cost far more than planned because the public sector are pretty useless at contracting for things like this.0 -
American Express has some funny cashbacks that are retailer specific, e.g. spend £50, get £20 statement credit for eating at Belgo.
What with Santander 123 3% on £20k, Tesco 3% on £3,000, TSB 5% on £2,000, a couple of Regular Savers, I know I am borderline on the £1,000 already.
If they count all the cashbacks as well, I am definitely over £1,000.
The TSB 5% Contactless cashback will be only worth 4% if they take 20% tax. And what about the 3% cashback on petrol I get for filling up at Sainsburys on Santander 123?
Radio 4 Moneybox should make an episode, called A Fistful of Tax Certificates.0 -
Cashback is non-taxable. It's treated as a discount on your purchase rather than income.
I sort of agree though that it's a bit of a PITA. When I used to do a tax return, getting hold of interest statements to do it was always what held me up. If you don't keep good track as you go along, sorting it out later is a nightmare. I guess this is a bit easier now though if it's paid gross as you only need to know cash received not how much the bank were paying you gross.0 -
alibean121 wrote: »If you don't keep good track as you go along, sorting it out later is a nightmare.alibean121 wrote: »I guess this is a bit easier now though if it's paid gross as you only need to know cash received not how much the bank were paying you gross.0
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If you do keep track as you go, it's a doddle. So it's a personal decision between doddle and nightmare.
the net amount is 80%, so the gross amount is net amount * 100 / 80. Although I seem to remember the tax return asks for the net interest received,
You don't always know what you're going to need at the time. By the time I worked out what I should have done, I'd mucked it up for 2 years worth.
Anyways, I think a lot of people also might not realise they're over the thousand until it's too late to keep the records.0
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