MSE News: All savings now to be paid tax-free

MSE_Luke

The personal savings allowance has launched so most people's money's now in the wrong place – shift it to boost interest...

Read the full story:
'All savings now to be paid tax-free'

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colsten

MSE, please could you correct the article throughout (and the title of this thread) - nobody in the UK has ever paid any tax on savings. The change is about interest on savings (/deposits).

Herbalus

If going down the pedantry line, you might as well point out that nobody is ever paid savings full stop.

"All savings to be paid..."

zerog

I haven't been paying attention to UK MSE-related news for a few months.

So a basic taxpayer with 20k in Santander 3%, 5k in Lloyds 4% and 4k in TSB 5% will nearly reach the limit, assuming they go over do they now have to register for self-assessment??

colsten

Herbalus wrote: »

If going down the pedantry line, you might as well point out that nobody is ever paid savings full stop.

"All savings to be paid..."

It isn't exactly pedantry to point out that something is plain wrong. You are absolutely right, nobody is ever paid savings.

zerog wrote: »

I haven't been paying attention to UK MSE-related news for a few months.

So a basic taxpayer with 20k in Santander 3%, 5k in Lloyds 4% and 4k in TSB 5% will nearly reach the limit, assuming they go over do they now have to register for self-assessment??

Nothing has changed regarding the responsibility of individuals to declare their taxable income. Whether you need to do this in the form of a self-assessment is a different and personal question - one that HMRC will answer if you ask them about your own circumstances.

I should add that doing a self-assessment if your only income is from salary/pension and savings interest is a matter of minutes.

Pincher

There is bound to be some story next year, where an 80 year old gets fined, because he/she got £1,100 in interest.


"But you could have elected to have your tax collected by adjusting the tax code."


"There is a form you can fill in, you don't have to do the full Self-Assessment."


Try telling my 80 year old mother that. Lucky girl, she has me to handle all that.

wakeupalarm

What about

Level 0, be a multi-millionaire on the front bench and pals with the PM and choose what tax you pay and at the same time increase it for those who are poorer?

Level -1, be a corporate giant and pick and choose where you pay tax and at what level?

Level -2, set up an offshore bank account and hide your millions?

Level -3, be rich enough and choose not to pay tax at all?

I'm sure there must be others not covered by the article.

zolablue25

Pincher wrote: »

There is bound to be some story next year, where an 80 year old gets fined, because he/she got £1,100 in interest.


"But you could have elected to have your tax collected by adjusting the tax code."


"There is a form you can fill in, you don't have to do the full Self-Assessment."


Try telling my 80 year old mother that. Lucky girl, she has me to handle all that.

Well, if their other income totaled less than £15,900 then there won't be a problem.

spinbuster

“George Osborne (more probably one of his advisers) has come up with a scheme that looks like a giveaway but is, in fact, a massive cashflow booster for the Revenue.” Roger Packer’s comment in http://www.moneysavingexpert.com/news/savings/2016/04/all-savings-now-to-be-paid-tax-free



Good point. Yes there is a potential sting in the tail from the HMRC PAYE Tax Coding system. You can end up paying tax on interest before you receive it or more seriously pay tax on no-existent interest. This is because of what Roger says i.e. the “so-called 'untaxed' interest forecast for 2016/17 is set against the ……..£1k personal savings allowance”, the key word being “forecast” which allows for the possibility for overestimating interest (and/or income).
Both these possibilities were covered recently at the beginning of BBC's Moneybox (3 April) here: - http://www.bbc.co.uk/programmes/b074vtvc
The saver can avoid these potential hazards by keeping his or her money in ISAs.

(N.B. for a 20% taxpayer £70,000 would generate the allowance interest of £1000 at 1.43%. For a 40% taxpayer, £35000 would generate the allowance interest of £500 at 1.43%).

My recent experience of the new HMRC Tax Coding system is one of the continuous overestimating of my income. When HMRC eventually agrees that they have miscalculated tax there appears to be no automatic reconciliation at the beginning of the next tax year (i.e. the issuing of a P800 leading to a refund).
Failure or reluctance to reconcile in enough cases would indicate deliberate policy in order to borrow tax payers’ money for as long as possible or even hold on to it, if miscalculation is not spotted by the tax payer. This would appear to be in keeping with comments in the press that “Now taxman's errors are your fault”.
See:- http://www.thisismoney.co.uk/money/news/article-2281294/HMRC-tax-code-change-means-taxpayers-spot-mistakes.html

Failure or reluctance to reconcile would support Roger’s view that “George Osborne (more probably one of his advisers) has come up with a scheme that looks like a giveaway but is, in fact, a massive cashflow booster for the Revenue.”

Perhaps a general ‘HMRC Tax Code Errors’ discussion could be continued in another thread in MSE? Does anyone know of one?

colsten

spinbuster wrote: »

Yes there is a potential sting in the tail from the HMRC PAYE Tax Coding system. You can end up paying tax on interest before you receive it or more seriously pay tax on no-existent interest.

There is the simplest of simple ways around this: check your tax code, and if it's wrong, have it changed. It takes less than 5 minutes to do so if you call HMRC on a Saturday morning.

Anyone paying tax on non-existent savings interest has only got themselves to blame.

Herbalus

The moneybox programme also said that there is an opt-out of HMRC's estimated interest calculation that adjusts your tax code and takes the estimated interest out of your salary. You can tell them to revert your tax code back to what it was, and pay any interest due on actual figures a year later through self assessment.