still confused £1000 tax free interest on savings

castle96

"At Budget 2014, we announced that from April 2015 you won’t have to pay tax on your interest if your taxable income is less than £15,600."
Doesn't mention £1000, just taxable/total income
Still confused (even for this current tax year)
My paye income is likely (Agency work, so therefore I never know) to be £12 k (may end up as £13k). I currently pay no tax on this/nil code.
My interest will be 'about' £3500. I have registered all savings accounts as gross interest.
If my interest which is obviously over £1000, takes my total income above £15600 (may do in the final April 16 calculation), I pay tax on that income above £15600 - is that correct ?

NectarCollector

From April 2015 you don't need to pay tax if your total income is under £15,600, you just need to fill out a tax form to claim the tax back R40 I think.

You wont pay tax on the 1st £1000 of interest from savings from April 2016 (next year)

colsten

The £1,000 allowance only comes into effect from the tax year 2016-17 onwards.

For 2014-15, there is a handy calculator on http://www.hmrc.gov.uk/tools/r85/r85-2015.htm

For 2016-17, I haven't yet seen any calculator, but there's a good summary document: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/414026/Savings_factographic_final.pdf

castle96

thanks. so if my paye + interest does exceed £15600, I only pay tax on the amount above £15600 ? Or, will they tax the £12k paye as well...

chris_m

castle96 wrote: »

thanks. so if my paye + interest does exceed £15600, I only pay tax on the amount above £15600 ? Or, will they tax the £12k paye as well...

You'll be taxed on the £12K because it's higher than your personal allowance of £10.6K, irrespective of interest.

polymaff

Forget the "total income is under £15,600". It is just government BS.

In 2015/16 you pay tax on any taxable earnings above £10,600; you don't pay any tax on taxable savings income of £15,600 minus your taxable earnings - providing that is a positive figure.

In 2016/17 you will pay tax on any taxable earnings above £11,000; you don't pay any tax on taxable savings income of £16,000 minus your taxable earnings - providing that is a positive figure. In addition you pay no tax on a further £1,000 of taxable savings income if you are only a basic-rate taxpayer, or on £500 if you are only a higher-rate taxpayer.

Err, I believe... What was all this about tax simplification?

bigfreddiel

polymaff wrote: »

Forget the "total income is under £15,600". It is just government BS.

In 2015/16 you pay tax on any earnings above £10,600; you don't pay any tax on savings income of £15,600 minus your earnings - providing that is a positive figure.

In 2016/17 you will pay tax on any earnings above £11,000; you don't pay any tax on savings income of £16,000 minus your earnings - providing that is a positive figure. In addition you pay no tax on a further £1,000 of savings income if you are only a basic-rate taxpayer, or on £500 if you are only a higher-rate taxpayer.

Err, I believe... What was all this about tax simplification?

That seems simple enough to me, or to simply further this is how it works.

If you earn less than the tax allowance your total income can be £15,600.

From next year you can earn £1,000 interest tax free (BR Tax payer)

There that wasn't too hard was it.

cheers fj

polymaff

bigfreddiel wrote: »

If you earn less than the tax allowance your total income can be £15,600.

No, Freddie. Do you mean Personal Allowance - not "tax allowance"? - and you haven't actually explained what are the consequences of having a "total income" of more or less than £15,600.

None of this can be stated so simply, nowadays, I'm afraid. Even my convoluted explanation is only an approximation of the truth

talexuser

If you google "personal allowance 2016/17" there are still links including the first one that comes up
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/413970/TIIN_4168_income_tax_personal_allowances_and_basic_rate_limit.pdf
that give 10800 as the basic allowance for 16/17, and 11k only from 2017.
The second link that comes up
https://www.gov.uk/government/publications/tax-and-tax-credit-rates-and-thresholds-for-2016-17/tax-and-tax-credit-rates-and-thresholds-for-2016-17
gives 11k for 16/17.

All very confusing.

xylophone

https://www.gov.uk/government/publications/tax-and-tax-credit-rates-and-thresholds-for-2016-17/tax-and-tax-credit-rates-and-thresholds-for-2016-17

is up to date - it was published only a month ago.

It shows the £5000 0% savings band and the £1000/£500 savings allowance for 2016-17.

For 2015-16 there was no savings allowance but there was a 0% savings band which operated as here (but for £15,500 read £15,600).

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/293747/Fact_sheet_template_-_10__tax_9.pdf

https://www.gov.uk/apply-tax-free-interest-on-savings/tax-free-savings

darkidoe

..... They make it overly complicated for the layman. Only accountants, bankers, or MSEer would be up to date with all this bureaucracy and spend time learning about it.