Personal Savings Allowance guide

shiwarrior

Hi

I am very very confused with this "Personal Savings Allowance"
this is a Government thing right ?
so has this been deducting from my wages automatically every month without me knowing ?

I have been trying to maximize my money (got a help to buy ISA from Barclays and there Blue rewards scheme as im over 40)

Can i sign up to get this Personal Savings Allowance somewhere? £1000 a year free sounds better than the Nationwide Flexi saver i was going to sign up to

Dazed_and_confused

There is nothing to sign up for.

There is no "allowance".

There is no free money.

There is a tax rate (the savings nil rate) which is commonly known as the Personal Savings Allowance. This allows upto £1,000 of taxable interest to be taxed at 0%.

People with low income cannot benefit from it (because they have no need to due to their low income).

People with very high income (£150k+) cannot benefit from it.

xylophone

Try

https://moneyfacts.co.uk/guides/savings/how-are-my-savings-taxed/

polymaff

This is the specifically British use of the word "allowance",

• British: an amount of money that can be earned or received free of tax.

and not the North American:

• North American:
  a small amount of money given regularly to a child by their parents.

https://www.google.com/search?q=dictionary#dobs=allowance

Doc_N

polymaff wrote: »

Don't blame anyone but HMRC. The legislation is usually quite reasonable - even some of G. Osborne's changes were quite structured - but it is when HMRC come to interpret / implement the legislation that things go awry.

Have you seen the sheer size and mess that successive governments have made of the UK tax legislation? Thousands of pages of legislation, with more and more grafted on in each successive year, a great deal of it for political, as against practical, reasons.

Tolley's Yellow Tax Handbook reprints the legislation. 14,475 pages for 2011/12 but 21,000 pages for 2018/19. How can any civil service department be expected to operate that, without a few problems - particularly when the government's slashed the number of staff over recent years by around a third.

This is a government-created issue. Not one created by HMRC.

polymaff

polymaff wrote: »

Don't blame anyone but HMRC. The legislation is usually quite reasonable - even some of G. Osborne's changes were quite structured - but it is when HMRC come to interpret / implement the legislation that things go awry.

As is regularly demonstrated by HMRC's never-working SA system - and the crazy, crazy implementation / documentation of Marriage Allowance Transfer.

Not to mention PSA, PoA, etc. etc.

Doc_N wrote: »

Have you seen the sheer size and mess that successive governments have made of the UK tax legislation? .

Well, obviously, I have - and have drawn the conclusions I have.

This part of MSE relates primarily to Income Tax and the issues surrounding it. Married Allowance Transfer is probably the most discussed tax measure at present. You try making the case that it is the legislation relating to MAT and not HMRC's documentation and implementation that has caused all of the confusion around MAT.

jono1975

I had a tax code change in February for untaxed interest earned in 2017/18, code adds up to the amount I owe. Then two weeks later I received a letter about my tax code for next year, 2019/20. This includes an adjustment for a pervious year.

When I asked HMRC what that's for they said it was for 2017/18 untaxed interest and 2018/19 estimated untaxed interest. So, seems like there's a duplication there for 17/18?

Also on the 2019/20 there is an untaxed interest line aswell, this reading note 2, I take to be an estimate for untaxed interest and it's the same amount as what I earned in 17/18, so they are taking this in advance I think over the year.

Has anyone else had this duplication, or am I making a schoolboy error here. Incidently the figure the HMRC operator gave me for this years estimate + 17/18 does not tally up with the letter, I only realised after the call.

Consumerist

jono1975 wrote: »

. . . Has anyone else had this duplication, . . .

It's not actually a duplication. The fact is neither they (nor you) know what untaxed interest you might receive during 2019/20 so they just make a guess that it will be the same as the previous year. This may lead to an over-payment or under-payment of tax in 2019/20 which will be sorted at the end of that tax year.

If you are reasonably certain that you will not have any unpaid tax next year then phone HMRC to tell them and if they agree then they should adjust your tax code accordingly.

badger09

jono1975 wrote: »

I had a tax code change in February for untaxed interest earned in 2017/18, code adds up to the amount I owe. Then two weeks later I received a letter about my tax code for next year, 2019/20. This includes an adjustment for a pervious year.

When I asked HMRC what that's for they said it was for 2017/18 untaxed interest and 2018/19 estimated untaxed interest. So, seems like there's a duplication there for 17/18?

Also on the 2019/20 there is an untaxed interest line aswell, this reading note 2, I take to be an estimate for untaxed interest and it's the same amount as what I earned in 17/18, so they are taking this in advance I think over the year.

Has anyone else had this duplication, or am I making a schoolboy error here. Incidently the figure the HMRC operator gave me for this years estimate + 17/18 does not tally up with the letter, I only realised after the call.

If your tax code was adjusted in February 2019 to collect tax underpaid in 2017/18, it would have been on a week 1/month 1 basis. In other words, it would only apply for the rest of tax year so would only collect 1/12 or at most 2/12th of the underpayment.

Similarly, it would only collect 1/12 or 2/12th of the tax due on estimated untaxed interest received in 2018/19.

To be honest, I've no idea why HMRC make such adjustments so late in the tax year.

As Consumerist says, the estimate of untaxed interest in your 2019/20 code is based on the latest figure they have (don't get me started on that one:() which is for 2017/18.

Best advice from me - wait until you know the actual interest received for 2018/19 and write to HMRC. Keep a copy of the letter as they have been known to go astray:cool:

Dazed_and_confused

HMRC wouldn't alter the tax code for 2018:19 to start collecting tax owed for 2017:18.

They do use the same interest figures year after years as an estimate so the most likely situation the op is,

2017:18 calculation issued. Tax owed included in 2019:20 tax code

2018:19 tax code revised to include the 2017:18 untaxed interest amount as an estimate of the interest to be received in 2018:19. This is not collecting any tax owed from 2017:18.

2018:19 tax code would be reduced as a result and tny tax calculated as owed would also be included in the 2018:19 code. Or it will be included in the 2019:20 tax code. Or a mix of both. This is nothing to do with the tax owed from 2017:18.

2019:20 tax code will include the 2017:18 untaxed interest amount as an estimate of the interest to be received in 2019:20.

2019:20 tax code will also include a deduction for the tax owed for 2017:18

2019:20 tax code may also include a deduction for some or all of the tax provisionally owed for 2018:19.

If the estimated interest figures are going to change significantly you can always provide your own estimate to replace the standard re-use of the 2017:18 amounts.