Personal Savings Allowance guide

colsten

Loudounman wrote: »

My wife and I have joint account with Santander..As we are both 20% tax payers we enjoy 10% tax reduction(Joint Account) on 3% interest paid monthly from 20K invested. Under the proposed new rules does that mean that I will be able to enjoy a further £400 tax free interest?

How are you enjoying a 10% tax reduction?

Loudounman wrote: »

Under the proposed new rules does that mean that I will be able to enjoy a further £400 tax free interest?

Can you explain how you calculated £400? What is the £400 "further" to?

colsten

Doc_N wrote: »

You'll each be able to receive £1000 interest tax-free - and no tax will be deducted from next April.

Can we please remain factual: the £1,000 Personal Savings Allowance (PSA) is for Basic Rate tax payers only. Higher Rate tax payers only have a £500 PSA, and [STRIKE]Advanced[/STRIKE] Additional Rate payers have no PSA.

Doc_N

colsten wrote: »

Can we please remain factual: the £1,000 Personal Savings Allowance (PSA) is for Basic Rate tax payers only. Higher Rate tax payers only have a £500 PSA, and Advanced Rate payers have no PSA.

I'm sorry - I rather thought we were remaining factual.

My reply was to Loudounman, whose post made it absolutely clear that neither he nor his wife are Higher Rate or Additional Rate taxpayers.

What, since we're wanting to remain factual, is an 'Advanced Rate payer'?

colsten

Doc_N wrote: »

What, since we're wanting to remain factual, is an 'Advanced Rate payer'?

Apologies, Additional. Thanks for pointing it out.

Eco_Miser

moneyfoolish wrote: »

Yes. The interest on all joint accounts is split 50% to each person.

Most accounts. Where one person contributed most of the money, that person can elect to pay most of the tax.

srisport

moneyfoolish wrote: »

Yes. The interest on all joint accounts is split 50% to each person.

Thankyou for your responce

Eco_Miser wrote: »

Most accounts. Where one person contributed most of the money, that person can elect to pay most of the tax.

roughly 60% of the funds in this 123 Account was contributed by me and other 40% by my partner, will the interest automatically be split 50/50 or do i need to contact Santander/HMRC to confirm how i would like the interest to be split.
Ideally i would prefer it to be split 50/50 for now to try and keep things simple (atleast in my head it seems more logical anyway)

Regards.

masonic

srisport wrote: »

roughly 60% of the funds in this 123 Account was contributed by me and other 40% by my partner, will the interest automatically be split 50/50 or do i need to contact Santander/HMRC to confirm how i would like the interest to be split.
Ideally i would prefer it to be split 50/50 for now to try and keep things simple (atleast in my head it seems more logical anyway)

The default is 50:50. If you are happy with that you do not need to do anything.

gazza007

This new system is stupid why can't the banks pay anything that is taxable over the PSA to HMRC? I'm Savvy, its going to be a nightmare for the elderly & disabled to name a few.

I guess the banks will inform HMRC who has earned interest on savings and HMRC will then wait for the returns and fine those who don't complete a return.

The wife & I have 3x 123 accounts we pay tax on 2 of the accounts as I'm a non tax payer. The last thing we want is HMRC fiddling with tax codes so we will be reducing the balance on the 2 accounts that we currently pay tax on so they don't exceed the PSA.

I will then be putting that surplus money into new sole accounts ensuring that I don't reach £11k in interest. In the rare event that I do it will have to go into ISA's

LXdaddy

gazza007 wrote: »

This new system is stupid why can't the banks pay anything that is taxable over the PSA to HMRC?

Each financial institution doesn't know how much interest you get on all your accounts. These days many people have interest from a number of different banks. Someone might have £500 interest from each of half a dozen banks - it's not practical for them to work out how much is over the Personal Savings Allowance - even that might be £1,000 or £500 or zero depending on the amount of other income.

From a few other posts it looks like HMRC are going to estimate how much interest we will have next year, based on previous years and then adjust our tax code so that something like the right tax is collected.

I'm sure there will be a lot more debate about the accuracy of that system. Which is very similar to the current estimate of how much charitable (gift aid) giving I will make next year, based on what I report this year (I'm a Higher Rate Tax Payer). I need to do a Tax Return each year so it does get sorted but the original estimate is generally incorrect.

Eco_Miser

gazza007 wrote: »

This new system is stupid why can't the banks pay anything that is taxable over the PSA to HMRC? I'm Savvy, its going to be a nightmare for the elderly & disabled to name a few.

As said, the banks don't know what your total interest is, nor what your allowance is. It could be anywhere from £17k to zero.

gazza007 wrote: »

I guess the banks will inform HMRC who has earned interest on savings and HMRC will then wait for the returns and fine those who don't complete a return.

That may happen, or they may only look at those whose interest is well over £1000.

gazza007 wrote: »

The wife & I have 3x 123 accounts we pay tax on 2 of the accounts as I'm a non tax payer. The last thing we want is HMRC fiddling with tax codes so we will be reducing the balance on the 2 accounts that we currently pay tax on so they don't exceed the PSA.

Why? The PSA between the two of you is £2000.
Max interest on 3 Santander 123s is £1800. Then there's your starting rate .

gazza007 wrote: »

I will then be putting that surplus money into new sole accounts ensuring that I don't reach £11k in interest. In the rare event that I do it will have to go into ISA's

Now that is stupid.

For a start, if you're currently a non tax-payer, you can have a total income of £17k next financial year without paying tax (not more than £11k earnings/pension).

Second, reducing your income to avoid paying 20% tax on the highest part, is giving up the 80% you would otherwise keep.