Savings Tax Allowance

squidlydiddly2

Having had Martin’s weekly email for as long as I can remember and having been retired for ten years now, the new £1000 tax free interest change in 2016/17 is the first tax change that has got me slightly flummoxed. My situation is this. For whatever reason my income drawdown company have told me they will not handle my three drawdowns after age 75 so in order to use the funds up as economically as possible I am taking the maximum from my funds each month which with my state pension brings my earnings to just under the 40% tax threshold. The gross savings interest I will get in 2016/17 (not counting ISA’s) will be about £1107.
:(My question is, as this makes my gross earnings including interest well over the 40% tax threshold will my savings tax free interest allowance be cut to £500?

jem16

squidlydiddly2 wrote: »

:(My question is, as this makes my gross earnings including interest well over the 40% tax threshold will my savings tax free interest allowance be cut to £500?

It will as your Savings interest is still counted towards total taxable income.

sandsy

Can you move some of your savings to an ISA to keep the returns out of earnings?

squidlydiddly2

I have a £10,000 65+ 3year bond that pays £400 pa interest and a joint 123 current account which pays 3% rather than 1.6% which is the best from elsewhere. What I can do is limit the amount I am taking from my drawdowns. One further question though, it looks like I will be filling in self assessment from now on. Can I declare all the interest on our 123 account on my wife's self assessment or does it have to be split 50/50?

greenglide

Can I declare all the interest on our 123 account on my wife's self assessment or does it have to be split 50/50?

If it is a joint account then the interest needs to be split and each person declares their share. I believe you can decide how much of the money is "yours" and how much is your wife's but I have never gone down that route.

It will be interesting to see how many people dont realise they need to declate interest over £1,000 or "overlook" it. I would have thought that HMRC will struggle to police this.

Signing up for online self assessment isnt straightforward either, the online process to join the party wants reasons why you want to do self assessment. It doesnt seem to be automatic.

squidlydiddly2

Thanks for your reply, luckily I have lots of time to decide what route to go down...!