Personal Savings Allowance guide

Eco_Miser

elephantrosie wrote: »

Thanks!

i wish i learnt about finance back in school.
all those x+y=z in additional maths were useless in real life!

It was knowing all those x+y=z, or in this case I=Prt, that helped me work out your interest. I is interest in pounds, P is principal in pounds, r is rate as a fraction (0.0489) and t is time in years (1)

bigadaj

elephantrosie wrote: »

Thanks!

i wish i learnt about finance back in school.
all those x+y=z in additional maths were useless in real life!

So start now, it's relevant to your financial life until the day you die.

elephantrosie

Eco_Miser wrote: »

It was knowing all those x+y=z, or in this case I=Prt, that helped me work out your interest. I is interest in pounds, P is principal in pounds, r is rate as a fraction (0.0489) and t is time in years (1)

Thanks! May I ask how you get 4.89%, rather than 5%?

ColdIron

elephantrosie wrote: »

Thanks! May I ask how you get 4.89%, rather than 5%?

It's the gross rate, what you get, rather than the comparative rate, used to compare accounts
http://www.moneysavingexpert.com/banking/interest-rates#AER

Eco_Miser

elephantrosie wrote: »

Thanks! May I ask how you get 4.89%, rather than 5%?

As ColdIron said, it's the gross rate, also known as the contractual rate, and i got it from the account details on the Nationwide site.

The 5% is what would result if the monthly interest was allowed to compound, and is obtained by a little algebraic manipulation of the simple interest formula I gave earlier.

Note that because of the £2500 limit for earning interest, no compounding takes place when that limit is reached, and 5% is not possible on £2500, although it is on lower amounts.

tinsoldier

Oof, this is all very confusing (to me at least). I wonder if anyone can shed light on my situation: I have earned over £1000 in applicable interest (eg non-ISA) this financial year, although I won't next year as it is all from savings that I'm now putting into a house. I'm unsure what I'm now supposed to do, and I don't want to risk a fine from HMRC (plus of course I want to pay my share of tax...!), so do I have to:

1. Submit a tax return?
2. Contact HMRC and make a payment (I know exactly how much I earned)?
3. Wait for them to alter my tax code in 2018/19 (I already know that my tax code for 2017/18 is the 'normal' one, 1150L)?

This question must have been asked before, but a search and a bit of trawling has yielded nothing so far...

isasmurf

tinsoldier wrote: »

Oof, this is all very confusing (to me at least). I wonder if anyone can shed light on my situation: I have earned over £1000 in applicable interest (eg non-ISA) this financial year, although I won't next year as it is all from savings that I'm now putting into a house. I'm unsure what I'm now supposed to do, and I don't want to risk a fine from HMRC (plus of course I want to pay my share of tax...!), so do I have to:

1. Submit a tax return?
2. Contact HMRC and make a payment (I know exactly how much I earned)?
3. Wait for them to alter my tax code in 2018/19 (I already know that my tax code for 2017/18 is the 'normal' one, 1150L)?

This question must have been asked before, but a search and a bit of trawling has yielded nothing so far...

https://www.gov.uk/government/publications/personal-savings-allowance-factsheet/personal-savings-allowance
What you need to do
You don’t need to do anything to claim your Personal Savings Allowance.

If you’re a basic rate taxpayer and have savings income or interest of more than £1,000 (£500 for higher rate taxpayers), you’ll have to pay some tax on this. But you don’t need to do anything yet.

HMRC will normally collect the tax by changing your tax code. Banks and building societies will give HMRC the information they need to do this.

schiff

It's going to be fascinating seeing how accurate the HMRC machinery collating all an individual's figures from numerous interest paying sources into one figure is going to be.

But this may be updated, it is a new thing after all:

"But you don’t need to do anything yet."

ColdIron

schiff wrote: »

It's going to be fascinating seeing how accurate the HMRC machinery collating all an individual's figures from numerous interest paying sources into one figure is going to be.

They're gonna freak when they come across some of the people here, 'self included

isasmurf

schiff wrote: »

It's going to be fascinating seeing how accurate the HMRC machinery collating all an individual's figures from numerous interest paying sources into one figure is going to be.

But this may be updated, it is a new thing after all:

"But you don’t need to do anything yet."

It's not new. They've been collecting the information and allocating it to people's records for years. Your Personal Tax Record shows what untaxed interest has been estimated for you, which, until they get the information for 16-17, will be based on what information they have on you for 2015-16.

It stresses that you must tell HMRC if the estimated interest is wrong.