Personal Savings Allowance guide

MSE_Helen_S

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Personal Savings Allowance guide.

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Thanks folks,

colsten

This article should also explain when / how / for whom the Starting Rate for savings applies. See lively debate in https://forums.moneysavingexpert.com/discussion/5339090

masonic

I think the "Of course, nothing has happened yet" message could do with qualification also, since anyone who has taken out a savings account with annual interest after 5th April is ostensibly already benefiting from the allowance.

Edit: I'm glad to see the situation regarding bond income is being clarified, as this has also been hotly contested.

veryintrigued

colsten wrote: »

This article should also explain when / how / for whom the Starting Rate for savings applies. See lively debate in https://forums.moneysavingexpert.com/discussion/5339090

Absolutely.

If it results in lower earners paying more tax on their savings (looks unlikely from the thread Colsten has referenced) then some savers may look to move money into (low paying) ISAs - so clarification on the MSE article is required.

veryintrigued

veryintrigued wrote: »

Absolutely.

If it results in lower earners paying more tax on their savings (looks unlikely from the thread Colsten has referenced) then some savers may look to move money into (low paying) ISAs - so clarification on the MSE article is required.

This guide looks to have been updated (the date on it seems to be Decemeber 2015) but still no ref to this.

Sadsaver

The guide suggests that people earning more than £1000 in savings interest may be required to fill in the new style tax return.
If this is the case, this sounds like this is going to be a nightmare for my wife and I!
Both my wife and i are both retired public sector workers, and pay our tax through the PAYE system. Consequently, we have never had to fill in a tax return in our lives.
However, we both have savings in long term savings bonds that are still paying a reasonable rate of interest since their inception. We will both subsequently earn more than £1000 each in gross interest in the 2016/17 tax year.
This is obviously going to be very complicated and time consuming for both ourselves and the Inland Revenue.
A clarification of the proposed new procedure would be appreciated as soon as possible!
It seems sense to be able to pay the tax owed via an ajustments of our tax codes, rather than complex form filling, for what is only going to be a relatively small amount of money owed to the Inland revenue.

colsten

Sadsaver wrote: »

This is obviously going to be very complicated and time consuming for both ourselves

Calm down. Even the existing tax return / self-assessment is a doddle for people whose income is from employment/pension and savings only. It has taken me less than 10 minutes a year for the last ten years to complete my self-assessment. Apparently I could even have just called the HMRC so that they could adjust my tax code but I preferred to do it all in writing via the online self-assessment.

The new Personal Tax Account is supposed to be even easier. You won't see much more detail on how everything is going to work for several months hence, as the first time tax on any excess interest will actually be payable is after 5 April 2017, and you probably have until the end of 2017 at least to declare your income for 2016-17. All you need to do in preparation is keep a record of your accrued interest payments during a tax year.

Sadsaver

colsten wrote: »

Calm down. Even the existing tax return / self-assessment is a doddle for people whose income is from employment/pension and savings only. It has taken me less than 10 minutes a year for the last ten years to complete my self-assessment. Apparently I could even have just called the HMRC so that they could adjust my tax code but I preferred to do it all in writing via the online self-assessment.

The new Personal Tax Account is supposed to be even easier. You won't see much more detail on how everything is going to work for several months hence, as the first time tax on any excess interest will actually be payable is after 5 April 2017, and you probably have until the end of 2017 at least to declare your income for 2016-17. All you need to do in preparation is keep a record of your accrued interest payments during a tax year.

Thanks for the advice. Everybody who i have spoken to previously, who currently has to complete a tax return, says it has been a nightmare, but perhaps they are not as astute as your goodself. I appreciate that it may not be as difficult as i am imagining, but its not quite as straightforward in my case as i have 3 seperate pensions, & it is difficult enough to co-ordinate my tax allowances as it is with the Inland Rvenue by phone, without introducing Tax owed on savings, into the mix! Anyway, we shall see how it all pans out in the fullness of time! Appreciate your input though. Thanks

HappyMJ

Sadsaver wrote: »

Thanks for the advice. Everybody who i have spoken to previously, who currently has to complete a tax return, says it has been a nightmare, but perhaps they are not as astute as your goodself. I appreciate that it may not be as difficult as i am imagining, but its not quite as straightforward in my case as i have 3 seperate pensions, & it is difficult enough to co-ordinate my tax allowances as it is with the Inland Rvenue by phone, without introducing Tax owed on savings, into the mix! Anyway, we shall see how it all pans out in the fullness of time! Appreciate your input though. Thanks

In my opinion the tax credits forms are much worse. Tax returns are easy in comparison.

moneyfoolish

Sadsaver wrote: »

Thanks for the advice. Everybody who i have spoken to previously, who currently has to complete a tax return, says it has been a nightmare, but perhaps they are not as astute as your goodself. I appreciate that it may not be as difficult as i am imagining, but its not quite as straightforward in my case as i have 3 seperate pensions, & it is difficult enough to co-ordinate my tax allowances as it is with the Inland Rvenue by phone, without introducing Tax owed on savings, into the mix! Anyway, we shall see how it all pans out in the fullness of time! Appreciate your input though. Thanks

Hi Sadsaver. I've got 3 seperate pensions if you include the State Pension and I've never filled in a tax return as I am a standard rate tax payer. I will earn over £1000 in interest when the new allowance kicks in but I have no intention of filling in a form unless they tell me that I must. When the tax year ends, I will just add up how much over the £1000 interest I have received, divide that amount by 5 and telephone the tax office to tell them how much I owe. I assume they will then vary my tax code for the following year. Ever since I retired they have calculated my tax code incorrectly in any case and had to adjust my code for the following year!

jem16

moneyfoolish wrote: »

When the tax year ends, I will just add up how much over the £1000 interest I have received, divide that amount by 5 and telephone the tax office to tell them how much I owe.

There will probably be a mechanism for people to declare interest that doesn't involve completing a tax return - the new personal tax accounts are supposed to do that.

However when phoning up you will need to give HMRC your total gross interest and not what you think you owe them.