April 2016 £1000 interest free

Bubbles15

I have an HSBC current account that I pay all my bills through but get no cashback. I have £1300 coming in monthly. I have £8000 in an instant access ISA that pays 1% interest. It seems I should change to Santander 123 am I right? At the moment I can manage my account on-line will I be able to do this with the 123?

Eco_Miser

Roland_Flagg wrote: »

Slight OT, but if you are out of work and living off your savings and have registered your non-ISA accounts with a R85 form, how much are you allowed to get in interest a year without paying tax?
Will it be your personal allowance plus £1K?

2015/16 it's Personal Allowance + 5K, 2016/17 it's Personal Allowance + 6k (No R85 needed from April).
The £5k is Starting Rate for Savings (used to be £2k @10%, now it's £5k @ 0%)

bowlhead99

DragonQ wrote: »

Suggesting richer people should pay more tax than poorer people isn't "politics of envy". It's sensible.

My point, though perhaps clumsily made, was that *everyone* thinks that everyone else should pay more than them. The poor say the rich have cash, the rich should pay. The rich say there is no point me working to make this cash just to give it to you who doesn't want to work or pay, why can't I keep what I earn and you pay more tax or take less benefits. The corporations would prefer to pay less tax because the headline higher profit after tax would please their investors. But the investors would still be caught one way or another because they would have more tax to pay on their larger levels of dividends and capital gains.

Suggesting that large corporations should pay what they actually owe in terms of tax, because at the moment most of them pay nowhere near what they are meant to, is not the same as saying they "should pay more tax".

Well, to a large extent they do pay 'what they are meant to' because they play by the rules that are made for them to play in. So if the government says the headline tax rate is 20% but corporations then 'get around it' and only pay 10%... then the government knew they were going to do that which is why they set the rates at 20% in the first place rather than some lower rate which is charged in Bulgaria or Cayman or Ireland, Hong Kong, Oman, etc where there would have been fewer incentives to get around it.

There are of course a few high profile companies which have not covered themselves in glory from a PR perspective by aggressively avoiding tax wherever possible - like Google which has just agreed to cough up £130m to settle a dispute with UK govt after an open audit of its books. But to the extent that international corporates are not paying what the governments expect, there are measures being put in place internationally to combat this - see OECD's work on BEPS which most governments are signing up to. http://www.oecd.org/ctp/beps.htm

I've been fairly surprised with some of the Tories' policies in this arena but it seems more like a "this'll shut them up for a while" package rather than them trying to seriously change society for the long term.

They do seem to have given away a bit from a few different angles, perhaps they are not all bad.

You are right that the goal of most governments in practice, whether here or overseas, regardless of political affiliation, is generally more about 'shut them up for a while'... because we only give them four or five years to run things the way they plan to run things, so they can't actually build deep rooted societal change for the long long term because someone else will come along with diametrically opposed policies in a few years time and will bring in their own contrary policies to do what they want with the country for a while. Maybe the commie countries like Russia or China had it right with their Ten Year Planned Dictatorships. At least they can get stuff done when they know longevity of office is on their side.

The living wage is one of the better policies but even that doesn't apply for under-25s.

Well, a 'minimum living wage' is just a nicer way of saying 'minimum wage' and over time it will rise with pressure from different voter groups, particularly if the economy is growing rather than contracting. I'm not surprised it doesn't apply to everyone, as you can't give the same minimum wage to kids as to adults - generalising, they have fewer skills, knowledge and experience to offer and are likely to be physically fitter and less likely to need to support a family than someone a couple of decades older, so need less income . There are always execptions but hey ho - you have to draw a line somewhere.

Obviously this is well off topic from the original post of whether their Santander bank interest on £20k is tax free. It is, but it won't necessarily remain the case if interest rates rise significantly or the bank offers better terms. The sidetrack was just because someone made a comment about FTSE100 companies using offshore holding companies as if that were somehow to blame for the world's woes, and specifically the complexity of the savings interest tax system. :rotfl:

Bubbles15 wrote: »

I have an HSBC current account that I pay all my bills through but get no cashback. I have £1300 coming in monthly. I have £8000 in an instant access ISA that pays 1% interest. It seems I should change to Santander 123 am I right? At the moment I can manage my account on-line will I be able to do this with the 123?

yes.

Newly_retired

I am trying to decide whether I am already earning all my post-April £1000 tax free interest from taxed accounts, or not.
Once I have worked that out, and it is not easy given how many different accounts I have, I am trying to decide whether to keep any money in my tax-free ISA at 2.5%, when my current accounts and regular savers are earning more.
Maths is not my strong point.....

bowlhead99

If you have about £25-30k total and can average 3-4% on it you can make your £1k. After that it is just a case of seeing what is the extra amount you are getting over the £1k and what is the lowest headline rate you are using.

For example you might have most of the money in accounts which pay 4 or 5% but on some of the money you might be earning 3% at Santander or Tesco which pushes you over £1k gross interest. For every £1000 invested in that account which is going to be taxable, you are getting £30 of gross interest which is £24 after tax. In your 2.5% ISA it would be £25 no tax to pay. If the amount is borderline it makes sense to use the ISA wrappers given there is a restriction on how much can go into one during a tax year. Exception would be if doing that pulls you below the minimum £3k deposit level at Santander (for example) and you stop earning such good interest on all the rest of the deposit.

polymaff

Roland_Flagg wrote: »

Slight OT, but if you are out of work and living off your savings and have registered your non-ISA accounts with a R85 form, how much are you allowed to get in interest a year without paying tax?
Will it be your personal allowance plus £1K?

In the case you describe it will be PA + £6k for 2015/16 - but are you REALLY only living off savings, with no other work/pension/benefit income?

Newly_retired

bowlhead99 wrote: »

If you have about £25-30k total and can average 3-4% on it you can make your £1k. After that it is just a case of seeing what is the extra amount you are getting over the £1k and what is the lowest headline rate you are using.

For example you might have most of the money in accounts which pay 4 or 5% but on some of the money you might be earning 3% at Santander or Tesco which pushes you over £1k gross interest. For every £1000 invested in that account which is going to be taxable, you are getting £30 of gross interest which is £24 after tax. In your 2.5% ISA it would be £25 no tax to pay. If the amount is borderline it makes sense to use the ISA wrappers given there is a restriction on how much can go into one during a tax year. Exception would be if doing that pulls you below the minimum £3k deposit level at Santander (for example) and you stop earning such good interest on all the rest of the deposit.

Thank you, I understand what you are saying.
Not sure how much over £1000 interest I am likely to have at the moment; I know it was over that last year as I filled in a tax return, but yes, Santander 123 is my main account.
Since the fee increase I am keeping a close watch, but I would be reluctant to ditch it as it is my main account for my recycling of Standing Orders, links with other banks etc. I try to keep it topped up to £20k but that is becoming increasingly difficult as I am also filling up several regular savers.
Lots of decisions to make before long.