Personal Savings Allowance guide

Consumerist

Sadsaver wrote: »

. . . Anyway, everything is now satisfactorily resolved

Well done! It just goes to show what can be achieved if you stick at it. :T

It shouldn't, of course, be necessary.

polymaff

Sadsaver wrote: »

Thanks to Polymaff and Consumerist for their comments & advice

Good to hear of anyone ramming HMRC backwards in the matter of Payments on Accounts

Maverickyork

I recieved a PPI from a bank in the past 14 days, can anyone let me know as part of the total amount of the compensation is for the PPI (insurance part) then that amount was paid compensation at a fixed interest rate of 8%.

In the payment they said they calculated the tax to be £400-500, I'm not a THICK person when it comes to working out interest, but this figure is the tax.

CAN ANYONE ADVISE ME IF I COULD RECLAIM THIS FROM THE TAX MAN, WITH THE INTRODUCTION OF THE PERSONAL SAVINGS ALLOWANCE I AM A BASIC RATE TAX PAYER, MY PSA WILL BE WELL UNDER £1000 in 2016-2017 TAX YEAR.

I HAVE ALSO HAD A SHARE SAVE MATURE ASWELL AGAIN IN THE SAME TAX YEAR, I SOLD THE SHARES AT MATURITY IN JUNE 2016.

DOES A EMPLYERS SHARE SAVE SCHEME AND PPI CLAIM COME UNDER CAPITAL GAINS, I DONT WANT TO OWE TAX ANYTHING. OR IF THEY OWE ME I WILL RECLAIM THIS.

CHEERS

Dazed_and_confused

You're getting yourself very confused somewhere.

On the one hand you say "they said they calculated the tax to be £400-500" but then go on to say "I AM A BASIC RATE TAX PAYER, MY PSA WILL BE WELL UNDER £1000 in 2016-2017 TAX YEAR."

If you are a basic rate taxpayer your PSA will be £1000 and you will have received £2000-£2500 interest from your PPI claim so you will have tax liability on your interest but the £400-500 which i think you mean the PPI company deducted will be sufficient to cover the tax due.

Example
Interest £2250 (tax deducted by PPI company £450)
Less PSA £1000
= £1250
Tax due on £1250 = £250
Tax paid at source = £450
Potential refund claimable from HMRC = £200

All the above is based on a fair few assumptions and reading between the lines of your post - some clearer facts would make it easier to give a useful response!

Consumerist

Maverickyork wrote: »

I recieved a PPI from a bank in the past 14 days, can anyone let me know as part of the total amount of the compensation is for the PPI (insurance part) then that amount was paid compensation at a fixed interest rate of 8%.

In the payment they said they calculated the tax to be £400-500, I'm not a THICK person when it comes to working out interest, but this figure is the tax. . .

The interest element of the PPI compensation is taxable income but you will be able to reclaim any overpaid tax. You may have to wait until the end of the tax year, when your total income is known.

SteveB

My only income is from the state pension, savings interest of less than £1000 and now not taxable dividends and in future I will not pay any income tax. Do I have to stop making gift aid payments? I have always relied on the tax on dividends, which was accepted by the Inland Revenue.

I haven’t looked through the entire site, so excuse me if this has already been answered.

bigadaj

SteveB wrote: »

My only income is from the state pension, savings interest of less than £1000 and now not taxable dividends and in future I will not pay any income tax. Do I have to stop making gift aid payments? I have always relied on the tax on dividends, which was accepted by the Inland Revenue.

I haven’t looked through the entire site, so excuse me if this has already been answered.

You can still make gifts but gift aid requires that you confirm you have paid at least that amount of tax in the financial year.

You'll need to contact the charities to let them know of your current situation, and ensure that they dint claim the tax relief going forward, obviously reducing the value of the donation but that's the rules.

Ashen

Just reading through Consumerist and Sadsaver's posts around savings interest, having posted my issue in another MSE forum, which I think may be a similar problem.

I noticed today my tax code changed recently, and my online HMRC account is showing this being due to savings interest. I'm only earning an approx £11K salary, so would expect to pay no tax on £2K of savings interest.

If the plan is for it to be assessed at the end of the tax year, a simple note underneath would help - would any reimbursement be done automatically? It's also showing my Personal Savings Allowance as being zero for some reason.

Dazed_and_confused

Ashen

From the limited info in your post you will not be entitled to the personal savings allowance.

If your total income is wages £11000 plus savings interest £2000 then the savings interest will all be taxable and your tax position would be as follows,

Wages £11000 - covered by personal allowance
Savings interest £2000 taxable at the savings rate of 0% (so no tax to pay).

If your wages were £11000 and savings income £5100 then it would still all be taxable but you would be entitled to the personal savings allowance and would be taxed,

Wages £11000 covered by personal savings allowance
Savings interest £5100 taxed as
5000 x 0% (savings rate band)
100 x 0% (personal savings allowance rate band)

It would help if you could say if the £11000 and £2000 is your only income and what your new tax code is (and how it's made up if not the bog standard 1100L)

xylophone

From the limited info in your post you will not be entitled to the personal savings allowance.

If your total income is wages £11000 plus savings interest £2000 then the savings interest will all be taxable and your tax position would be as follows,

You seem to be forgetting the 0% savings rate.


See http://www.taxvol.org.uk/about-tax/entitled-10-band-savings-interest/


"The following examples for 2106/17 explain the interactions between the SR and the PSA.

Example 1 - Alex is 71 and has non savings income of £11,000. In addition he receives £600 in savings income. His non savings income is below £16,000 and the savings income is within the 0% savings rate of £5000. He doesn’t need to pay tax on his savings and doesn’t have to do anything.

Example 2 - If Alex’s non savings income is £15,600, it is still below the £16,000 threshold and £400 of his savings income is covered by the 0% savings rate. The remaining £200 is covered by the Personal Savings Allowance. He doesn’t need to pay tax on his savings and doesn’t have to do anything.

Example 3 - If Alex’s non savings income is between £16,000 and £43,000, he will not be eligible for the 0% Starting Rate but his savings income will be covered by the Personal Savings Allowance of £1,000. He doesn’t need to pay tax on his savings and doesn’t have to do anything.

Example 4 - If Alex’s non savings income is between £43,001 and £150,000 he will not be eligible for the 0% starting rate and only £500 of his savings income will be covered by the Personal Savings Allowance. The remaining £100 is taxable at 40% and he will need to contact HMRC to arrange payment."

The OP has non savings income of £11,000 and savings income of £2000.

His non savings income is below £16000.

His savings income is within the 0% savings band.

Therefore he pays no tax on the savings income.