Interest tax-free changes on savings April 2016

sharpharp

I was reading an article which said about the first £1,000 of savings interest tax-free for basic rate taxpayers from April 2016


Does anyone actually know how this will work? i.e. is it per bank?


If for example you have multiple bank accounts accruing interest at the moment on the basic rate of tax, do they look at all your savings across all banks and then give you the £1000 interest free or will they do this per savings account?


Finding this a bit confusing...

Futuristic

Banks will stop taking 20% off your interest every month automatically from April.

I assume if you exceed this you'll need to fill a form online through HMRC to pay tax due. So you need to keep up to date at the end of the tax year if you're going to exceed the basic rate £1k allowance .

Ed-1

sharpharp wrote: »

I was reading an article which said about the first £1,000 of savings interest tax-free for basic rate taxpayers from April 2016


Does anyone actually know how this will work? i.e. is it per bank?


If for example you have multiple bank accounts accruing interest at the moment on the basic rate of tax, do they look at all your savings across all banks and then give you the £1000 interest free or will they do this per savings account?


Finding this a bit confusing...

It's across all banks not per bank. All banks will, from April, not deduct any tax off your interest. If you have accumulated more than £1000 in interest during the tax year then you will be responsible for informing HMRC and settling the tax due on the remainder (it's not been confirmed exactly how).

jonesMUFCforever

I would assume that the banks will be forced to tell HMRC any interest paid outside ISA's so don't try to avoid it.

colsten

jonesMUFCforever wrote: »

I would assume that the banks will be forced to tell HMRC any interest paid outside ISA's so don't try to avoid it.

They have all been doing so for some time, part of the European Savings Directive.

It would be pretty foolish to try to avoid the few pennies of tax on interest above £1,000 / £500.

colsten

More info: https://forums.moneysavingexpert.com/discussion/5342041

edwink

Ed-1 wrote: »

If you have accumulated more than £1000 in interest during the tax year then you will be responsible for informing HMRC.

colsten wrote: »

It would be pretty foolish to try to avoid the few pennies of tax on interest above £1,000 / £500.

One says

If you have accumulated more than a £1,000 in interest you will be responsible.

The other says

Foolish to try to avoid tax on interest above £1,000

Any idea anyone. I'm lost now.

Edwink

colsten

Why are you lost? If you are a BR tax payer, you'll have to inform HMRC if you earn more than £1,000 in interest in 2016-17. And you'd be foolish if you ignored this duty if you have it.

edwink

colsten wrote: »

Why are you lost? If you are a BR tax payer, you'll have to inform HMRC if you earn more than £1,000 in interest in 2016-17. And you'd be foolish if you ignored this duty if you have it.

Just reread the two posts. Yup got it now. Call it a senior moment. Both read differently last time I read them.

Thanks

Dan83

I earn 25k p/a, am I a basic rate tax payer?

Futuristic

Dan83 wrote: »

I earn 25k p/a, am I a basic rate tax payer?

To be eligible for the £1,000 tax-free Personal Savings Allowance your taxable income needs to be less than £42,700 a year.

To be eligible for the £500 tax-free Personal Savings Allowance your taxable income needs to be between £42,701 and £150,000 a year.