Joint accounts and the new PSA tax rules

voddyman

Hi,My first question is, my wife and I are now retired and at present do not have enough income to pay income tax, however that will change [I think] when I start to get my state pension when I turn 66 because with state pension and my own company pensions I will be over my income personal tax allowance which at present is £11000 I believe. So I'm taking it that I will then have to start paying income tax at that point?

Second question regarding the new PSA, I am aware that i would need to earn £1000 in interest on savings accounts before I start to pay tax, but my question is, as all my wives and my savings are in JOINT accounts, so is the limit still £1000 or is it doubled to £2000 for joint accounts?

I hope this doesn't sound like a stupid question but I'm a bit confused.

Thanks for any help

DawlishDilbert

Re second question: say a joint account earns £500 interest in a year. Half of that is considered yours, and half your wife's. So that means YOUR £1000 allowance is reduced by £250. Your wife's allowance reduced by same amount. Then apply same principle to other accounts, removing half the interest from your remaining £750 etc.... etc....

Eco_Miser

Yes, if your pension income is over £11000 you will have to pay tax on the excess (almost certainly taken from your company pension by PAYE).

For the PSA, both you and your wife can have £1000 in savings interest at nil rate - this is the sum of interest from joint accounts (split 50:50 unless there's a good reason to do otherwise) and sole accounts and interest-paying investments like gilts.

Whatever the amount, no tax will be deducted at source, and you would need to tell HMRC if you exceeded £1000.

CLAPTON

voddyman wrote: »

Hi,My first question is, my wife and I are now retired and at present do not have enough income to pay income tax, however that will change [I think] when I start to get my state pension when I turn 66 because with state pension and my own company pensions I will be over my income personal tax allowance which at present is £11000 I believe. So I'm taking it that I will then have to start paying income tax at that point?

Second question regarding the new PSA, I am aware that i would need to earn £1000 in interest on savings accounts before I start to pay tax, but my question is, as all my wives and my savings are in JOINT accounts, so is the limit still £1000 or is it doubled to £2000 for joint accounts?

I hope this doesn't sound like a stupid question but I'm a bit confused.

Thanks for any help

do remember your wife can transfer 10% of her allowance to you

OldBeanz

Read here first: http://www.moneysavingexpert.com/savings/tax-free-savings

voddyman

Eco_Miser wrote: »

Yes, if your pension income is over £11000 you will have to pay tax on the excess (almost certainly taken from your company pension by PAYE).

For the PSA, both you and your wife can have £1000 in savings interest at nil rate - this is the sum of interest from joint accounts (split 50:50 unless there's a good reason to do otherwise) and sole accounts and interest-paying investments like gilts.

Whatever the amount, no tax will be deducted at source, and you would need to tell HMRC if you exceeded £1000.

So, am i correct in saying that, my wife and I can earn up to £1000 each in interest before we have to pay tax, even though all our savings are in joint names?

xylophone

See http://www.taxvol.org.uk/about-tax/entitled-10-band-savings-interest/ - are you also eligible for the "starting rate for savings income"?

Eco_Miser

voddyman wrote: »

So, am i correct in saying that, my wife and I can earn up to £1000 each in interest before we have to pay tax, even though all our savings are in joint names?

Yes (on your interest - you'll still have to pay tax on your pension), and possibly even more, see link in xylophone's post

CLAPTON

voddyman wrote: »

So, am i correct in saying that, my wife and I can earn up to £1000 each in interest before we have to pay tax, even though all our savings are in joint names?

you would do yourself a big favour if you actually said what the situation was for yourself and your wife in term of pension and interest income

OldBeanz

OldBeanz wrote: »

Read here first: http://www.moneysavingexpert.com/savings/tax-free-savings

"What's tax-free savings and the starting savings rate? Simply put, for most people these mean that if you earn less than £15,600 a year in income and savings interest combined, you won't have to pay any tax on the interest paid on the savings. If this applies to you, you're able to register with any bank or building society you have savings with to pay you interest without tax taken off."

Eco_Miser

OldBeanz wrote: »

"What's tax-free savings and the starting savings rate? Simply put, for most people these mean that if you earn less than £15,600 a year in income and savings interest combined, you won't have to pay any tax on the interest paid on the savings. If this applies to you, you're able to register with any bank or building society you have savings with to pay you interest without tax taken off."

That becomes obsolete on Wednesday, then it's £17000, and everyone is paid interest without tax taken off, no registration needed, or possible.