April 2016-Personal Tax Accounts (savings & divi allowances)

C_Mababejive

DawlishDilbert wrote: »

Hello.

I have a simple question which I can't find an answer to anywhere! Perhaps it's an 'unknown' at the moment.

Is interest from ISAs (already tax free of course) included in the £1000 allowance? If not, I guess that's another 'plus' for ISAs as although one would need to check the interest rate on offer, one wouldn't need to include it in the £1000.

Thanks.

DD

No ,AFAIK interest from ISA products is totally excluded whether that interest or gain is from cash,funds or equities.

The sting in the tail with this is that as far as i understand it,,

If you are a basic rate taxpayer then interest earned in dividends and savings is counted as income and so

as an example,,,tax year 2016/17

Personal allowance £10,800
Basic rate limit £31,900
Higher rate threshold £42700


You could find yourself paying a lot more tax on your extra earned income

polymaff

C_Mababejive wrote: »

tax year 2016/17
Personal allowance £10,800
Basic rate limit £31,900
Higher rate threshold £42700

£11,000
£32,000
£43,000

today, 8th January 2016.

Definitely time to swat those bees.

DawlishDilbert

Thanks for the quick reply. So to see if I've breached the £1000 and need to pay tax, I only need to tot-up the interest earned on my non-ISA savings? I only query this as it sounds good news but you talk about a sting in the tail.....

C_Mababejive

polymaff wrote: »

£11,000
£32,000
£43,000

today, 8th January 2016.

Definitely time to swat those bees.

Correct, i seem to have been looking at the wrong pdf on HMRC

https://www.gov.uk/government/publications/income-tax-personal-allowance-and-basic-rate-limit-for-2016-to-2017/income-tax-personal-allowance-and-basic-rate-limit-for-2016-to-2017

polymaff

DawlishDilbert wrote: »

Thanks for the quick reply. So to see if I've breached the £1000 and need to pay tax, I only need to tot-up the interest earned on my non-ISA savings? I only query this as it sounds good news but you talk about a sting in the tail.....

In 2016/17 it depends upon your marginal tax rate. If it is basic rate, then the PSA element is up to £1,000. If it is higher rate then the PSA element is up to £500. If it is the additional rate then there is no relief. Remember that there is also scope for extra relief (up to £5,000) via the Starting Rate Allowance.

Proof if proof were needed that there are no simple answers in Mr. Osborne's world of "Tax Simplification"