Live off interest?

wayne42

InMyDreams wrote: »

You can only register for gross income if you believe that your income will not be enough to pay tax in the first place (about 5K ish). So if you've already earned over that since April you can't do it this year. If you already have your £150k in the bank by next April you won't be able to do it next year either. Even if you finished working right at the end of this tax year, filled out the R85 at the beginning of the next tax year (with no job and no savings) and then sold your house, you'd be hard pushed to convince anyone that it was never your intention to have an income of over £5k.

We sold up last year and moved to Asia.
Before we left we opened an offshore acc with Anglo Irish IOM...All they really needed was our overseas address.
We receive the interest gross annually but we are allowed to withdraw up to 20% of our deposit without penalty. (in case of emergency)
Life is good..
Cheap too.:beer:

djbd1973

wayne42 wrote: »

We sold up last year and moved to Asia.
Before we left we opened an offshore acc with Anglo Irish IOM...All they really needed was our overseas address.
We receive the interest gross annually but we are allowed to withdraw up to 20% of our deposit without penalty. (in case of emergency)
Life is good..
Cheap too.:beer:

Do you think that say in five years time, you wanted to move back, would you have enough money to be able to get a footing in the housing market?

Reason I ask is that a friend of mine moved out to Thailand for a few years but his money did not keep up with inflation as much as he wanted to and he has struggled a bit since his return. He is doing okay, don't get me wrong but he was in a better financial position when he left than when he returned.

He still had better weather though!!

wkt54

Inmydreams wrote:

You can only register for gross income if you believe that your income will not be enough to pay tax in the first place (about 5K ish).



I put £115,000 into Nationwide yesterday. 1 year bond at 6.7%.

She gave me a R85 which I filled in and will be getting interest gross, as I don't work.

She knew I would be getting more than £5225 in interest, but didn't stop me getting it gross.

KingKenny

wayne42 wrote: »

We sold up last year and moved to Asia.
Before we left we opened an offshore acc with Anglo Irish IOM...All they really needed was our overseas address.
We receive the interest gross annually but we are allowed to withdraw up to 20% of our deposit without penalty. (in case of emergency)
Life is good..
Cheap too.:beer:

Bit more info here please Wayne, i am very interested, a bit envious, where are you, how much do you get in interest each month, does it cover living costs etc etc?

Cheers:beer:

free4440273

wkt54 wrote: »

Inmydreams wrote:

You can only register for gross income if you believe that your income will not be enough to pay tax in the first place (about 5K ish).



I put £115,000 into Nationwide yesterday. 1 year bond at 6.7%.

She gave me a R85 which I filled in and will be getting interest gross, as I don't work.

She knew I would be getting more than £5225 in interest, but didn't stop me getting it gross.

i really am confused now, although i'm glad you have brought this up. i intend to apply for the same bond soon and my impression was that if the interest received exceeded the £5225 limit, you could not receive gross. i do not work also. can anybody clarify as this is driving me mad. i would actually ask NS themselves, but very often they simply duck the issue by saying 'yes, you're not working, so you can claim gross. if the inland revenue think otherwise, they will chase you up' - i don't want to be paying monies back to the IR! I was told on the forum many weeks back that if the interest exceeds £5225, i could not claim gross, but that i could instead fill in form R40. I don't want to do anything improper; on the other hand claiming gross - if i am entitled to do so - would be awesome! Thanks

wkt54

I saw a personal advisor at Nationwide yesterday.

It was she who gave me the R85, and said I could claim interest gross.

As far as she was concerned, I would have to declare my interest next tax year - which will be over £5225, and pay tax on the difference.

I took it she knew what she was talking about - is she wrong?

Primrose

Icesave pays a good rate of interest which can also be paid monthly. However, you would need to read their terms and conditions to see how easily the monthly interest gets paid into your bank account. Also various Banks & Building societies have One Year Bonds on which interest can also be paid monthly (although you get a marginally lower rate of interest if it's paid this way) and this can be paid direct into your current account.

noh

free4440273 wrote: »

i really am confused now, although i'm glad you have brought this up. i intend to apply for the same bond soon and my impression was that if the interest received exceeded the £5225 limit, you could not receive gross. i do not work also. can anybody clarify as this is driving me mad. i would actually ask NS themselves, but very often they simply duck the issue by saying 'yes, you're not working, so you can claim gross. if the inland revenue think otherwise, they will chase you up' - i don't want to be paying monies back to the IR! I was told on the forum many weeks back that if the interest exceeds £5225, i could not claim gross, but that i could instead fill in form R40. I don't want to do anything improper; on the other hand claiming gross - if i am entitled to do so - would be awesome! Thanks

You are correct, if your income for this tax year will exceed £5225 you should not fill in a R85 form.
The other poster invested £115000 in Nationwide at 6.7% as we are already more than 5 months into this financial year that will earn her approx. 7/12 x 0.067 x £115000 = £4494 this tax year. So assuming she has had or will have other income this year of less than £230 she was correct in filling in the R85. Next year she should not fill in the form as she will have more than her allowance as income.
Edit:- I think It should be "next year tell Nationwide that you are no longer eligible"
Here is a link to the form http://www.hmrc.gov.uk/forms/r85.pdf

Nigel

wkt54

He!

Thanks Nigel. Free, hope you don't mind me asking this in your thread, but I think we are after the same information.

I am getting my gross interest paid monthly into my Flex account, and will not be over £5225, next April.

The bond will expire next September, so what you are saying , is that I should not fill out an R85 then, whatever I decide to do with the money?

If I have 20% interest taken off the following year, will I be able to claim a refund in 08/09?

InMyDreams

When you sign the R85 form, you have to sign under where it says

"I declare that • my income (or the saver’s income, if this form is completed on their behalf) is below my annual tax-free income limit and • if it increases above the annual limit I will tell the bank or building society straightaway. I understand that HM Revenue & Customs may check the information given on this form."

And the first question is in fact

"Is your income below your annual tax-free income limit? If completing this form on behalf of the saver, refer to their income. If Yes, please complete this form. If No, please do not complete this form as you are not eligible to receive interest in this way."

It's not the banks responsibility to ensure whether or not you should be filling in the form. It's yours. There are very clear guidelines with each form. Google for R85 and you can download a pdf of the form and the notes.

So if you think you will have to pay tax, you shouldn't be filling in the form. But if you fill in the form and your circumstances change and you need to pay tax, that's fine so long as you inform the authorities.

I have filled in a form this year because I'm right on the limit. I don't think I'm going to need to pay tax this year, but it's going to be close. But as I fill in a tax return every year anyway (self employed, very part time) I'll know soon enough when to tell the banks to stop with the gross interest.

As for being abroad, I'm no tax expert and I don't know how this changes what tax you have to pay. All I know is that if you know you're going to have to be paying tax, you shouldn't fill in an R85.