Personal Savings Allowance guide

hansi

I currently have an easy access e isa with Virgin which I want to transfer to an easy access account after April, so that I can withdraw and add to it. I noticed that as well as the basic instant access account paying.1.01%, they also offer a Saving to Buy account that pays 1.41%. Is there any reason, I can't apply for the latter. I couldn't see any special conditions attached to it.

masonic

hansi wrote: »

they also offer a Saving to Buy account that pays 1.41%. Is there any reason, I can't apply for the latter. I couldn't see any special conditions attached to it.

If I'm looking at the same account, the rate is 1.3%. The account does not have any restrictions like a HTB ISA does, so there isn't any reason you couldn't open one. However, the maximum balance is £30,000 and you could get your first £30k of savings into current accounts for 3-5% interest, so as to whether it would be a good idea...

RedcarBear

I've just had a tax code notice from HMRC for 2016-17. It shows my personal allowance of £11K, then my personal savings allowance of £1K then untaxed interest of £1230 effectively reducing my tax code to 1077L. Martin reckons you shouldn't be taxed until you reach the £1K mark then HMRC will tax the amount above but HMRC have added this £1230 in advance telling me my bank has told them to tax it. The odd thing is that I don;t have anywhere near the amount of capital to generate that kind of savings interest and what I do have is mainly in an ISA!!! When I rang HMRC they said one of my financial institutions had told them the amount but they (HMRC) couldn't say who it was and it was for me to contact my banks and prove to HMRC they had been misinformed. I have confirmed with my banks they have not informed HMRC of any such amount. So where has it come from and how do I prove to HMRC it shouldn't be taxed? BTW I'm a basic rate taxpayer, I don't have benefits or complete tax returns etc.

colsten

Fill in this form: https://online.hmrc.gov.uk/shortforms/form/P2

Keep it factual and short - no need to tell them about Martin or about banks or about previous conversations

bowlhead99

Rather than phoning HMRC, write to them listing the approximate amounts of interest you earned from each of your accounts so far in 2015/16 and confirming that you do not expect to receive more than the savings allowance in 2016/17.

We have not got to the end of the 2015/16 tax year yet for them to be able to use your real 2015/16 final number in coming up with the coding for 16/17. So the estimate may have been made using 2014/15 final figures or perhaps what you earned in the early part of this tax year and multiplied up on e assumption that you'll get the same in the second half of this year as you got in the first. Such estimates cab be skewed by the fact that the interest you get paid in a particular month may be the result of money deposited for several months or even years, on maturity.

This seems like the sort of thing you could get resolved quite amicably by letter in the same way a higher rate taxpayer can currently contact them to adjust their tax coding to capture the extra amount of interest earned which did not have high rate tax deducted at source.

If not, it is only going to affect you by the tax on the £230 at 20% for a year, which is under a fiver a month off your net pay during 16/17 and will be refunded at end of year once the 2016/17 actuals are really known.

So, some would not even bother with the letter.

hansi

Thanks masonic. I'm only looking at 5k so the HTB is better. I was looking at an old interest rate. Still, it's better than their basic instant access account. Thanks for your quick reply

tindella

Hi everyone - so far I've managed to understand that my long-term fixed ISA with three years left to run is not affected by this PSA. However, I don't fully understand the implications for my other accounts. I have savings in a building society, an easy access account with another bank and the NSI "pensioner" three year bond. I've read that the interest on those last three items will be paid to me gross until it reaches £1000 - and then? I do some part-time work throughout the year, so I do have a tax code - so will I then start paying more than 20p in the £ on my earnings? If so, should I open a new ISA with money from my building society account to make sure my interest doesn't reach £1000 - so that my tax code will be left untouched?? Sorry there's so many questions!!!

zolablue25

tindella wrote: »

If so, should I open a new ISA with money from my building society account to make sure my interest doesn't reach £1000 - so that my tax code will be left untouched?? Sorry there's so many questions!!!

That depends on whether you can get better interest in your ISA than you could in a "non-ISA" account after the equivalent tax is deducted.

young_pensioner

When they became available, I invested in the pensioner 65+ bonds. They are supposed to be tax-free, but from what I understand I will need to apply for the a refund of the tax, since it will have been deducted at source.


Will the new interest allowance change the need to reclaim? Will it simply be paid gross?

colsten

tindella wrote: »

I've read that the interest on those last three items will be paid to me gross until it reaches £1000 - and then?

The banks will pay all your interest w/o tax deduction fro April 6 onwards.

tindella wrote: »

I do some part-time work throughout the year, so I do have a tax code - so will I then start paying more than 20p in the £ on my earnings?

you will pay more than 20% if your total income (work + non-ISA savings) will be some £31,900 after personal allowance (£11,000).

tindella wrote: »

If so, should I open a new ISA with money from my building society account to make sure my interest doesn't reach £1000 - so that my tax code will be left untouched??

That would only be a good idea if you could find an ISA that pays better interest than the many current & regular savings accounts which pay between 3% and 6%. Even if you had to pay 20% tax on the interest. You'd be the first person to find such an ISA in the last 3 years.