Starting rate for savings

polymaff

Birdie6972 wrote: »

Hi Polymaff

Ref. The P2 notice of coding (see post #13) :

Before MA was applied, my tax code was 10600-3400=7200 (code 720)
This meant I had 7200 tax free, so 14000-7200=6800@20% gives 1360.

After MA was applied, my tax code was 11660-2340=9320 (code 932)
This meant I had 9320 tax free, so 14000-9320=4680@20% gives 936.

When the MA was applied you can see that they added 1060 to 10600 making 11660, and at the same time reduced the figure of 3400 by 1060, making 2340.

This makes a difference in code from 720 to 932, which equates to 2120 @ 20% = 424.

That's pretty cranky - but only a foretaste of future P2s where all sorts of trickery will be par for the course. "We want your money - and we want it now" must surely be the new HMRC motto. I'm sure that HMRC would respond "It'll all work out in the end" - but, really, what they mean is that we're doing our best to get you all into the habit of "Payments on Account".

Anyway, you've got your answer. MAT - as implemented - is not part of the income assessment, but a rebate on the total liability. (EDIT: as confirmed in your posting #21)

Birdie6972

Ok, I thought that was probably the case. Thanks for your help Polymaff, and everyone else who replied.

frank777

Birdie6972 - http://www.moneysavingexpert.com/savings/tax-free-savings?_ga=1.71963347.1573426768.1462104060

''So, for example, if you earned £14,000 in income, and have £5,000 in savings interest, your total income's over £17,000, so you would pay basic-rate tax on the final £2,000 of savings interest''

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UPDATE
Hope this helps Birdie6972, and if you happen to be 64 and draw your state pension in this Tax Year 2016/17 - your PSA would be £1,000 Minus £2,000 = Extra £400 in income Tax 2016/17
see post - https://forums.moneysavingexpert.com/discussion/5455909

UPDATED - I'm sorry ''zagfles'' and thank's - I got it into my head that the State Pension was classed as income for the whole of the Tax year 2016/17, when working out the Personal Savings Allowance. An old and wiser fool now.

“To err is human, to forgive divine.”
any vacancies at HMRC