Not sure what to do...

reggie

I have not been working for the past year and have therefore been having gross interest on our savings (in my name) - I am hoping to do some supply work - but this will be irregular, it might only amount to a couple of days here and there. I'm not sure what I do regarding tax - do I now pay tax on savings? There's no way I'll get enough work to earn the max I'm entitled to tax free - is it a case of having to claim any monies back from the tax man in April?

jem16

If you kow you have taxable income less than your personal allowance you can continue to have savings interest paid gross.

Remember though that taxable income includes earnings, gross interest and dividend payments.

Jake'sGran

Dividend payments on shares are already taxed (this was the first thing Gordon Brown did when Labour came to power) and although I include them on my tax return each year they are ignored by the Revenue.

Just, add up what you do earn plus the gross interest on your savings and
declare any dividends. You can soon see if you have reached your Tax Free Income figure. Actually, it is a bit of a pointless exercise if it turns out you have not earned enough. You can check on H.M. Customs & Excise to see what your tax free pay is if you don't know.

reggie

Thanks for the replies.
I suppose it will depend on the amount of work I get, but if I keep a close eye on interest earned and any income and make sure it's less than my personal allowance then it looks like I should be ok.

I do get dividends from shares, but didn't know that the Revenue ignored it.
I have never had to fill in a tax return, so am trying to keep an eye on things so I don't end up owing tax.

noh

Jake'sGran wrote: »

Dividend payments on shares are already taxed (this was the first thing Gordon Brown did when Labour came to power) and although I include them on my tax return each year they are ignored by the Revenue.

Just, add up what you do earn plus the gross interest on your savings and
declare any dividends. You can soon see if you have reached your Tax Free Income figure. Actually, it is a bit of a pointless exercise if it turns out you have not earned enough. You can check on H.M. Customs & Excise to see what your tax free pay is if you don't know.

Dividends payments on shares are not already taxed.
They come with a notional 10% tax credit. You are unable to reclaim this if you are a non taxpayer. If you are a standard rate tax payer no tax is due. If you are a higher rate tax payer tax is due.
HMRC dont ignore dividend income. It is grossed up using the notional 10% and added to your income from other sources, interest, employment to determine your total income for the year.

Nigel

jem16

Jake'sGran wrote: »

Dividend payments on shares are already taxed (this was the first thing Gordon Brown did when Labour came to power) and although I include them on my tax return each year they are ignored by the Revenue.

The tax credit that comes with dividends means that there is no further tax liability if you are a basic rate or non taxpayer, although the dividends themselves could be enough to push you into the higher rate tax bracket. If it takes you into higher rate then you have a further 25% tax to pay.

So HMRC does not ignore them and it needs to know them as they count towards your taxable income.

EDIT : Snap Nigel!

reggie

It's unlikely that I'll get anywhere near the higher rate, but if I do have to fill in a tax return then I'll be sure to put the dividends down. Thanks

noh

reggie wrote: »

It's unlikely that I'll get anywhere near the higher rate, but if I do have to fill in a tax return then I'll be sure to put the dividends down. Thanks

It's not getting near the higher rate that is important in your case. The grossed up amount of the dividends needs to be added to your savings income and income from employment. If that amount exceeds your personal allowance you shoud not register for gross interest on your savings.

Nigel

reggie

Ok - thanks.

Jake'sGran

[quote=jem16
So HMRC does not ignore them and it needs to know them as they count towards your taxable income.

EDIT : Snap Nigel![/quote]


Yes, I always put it badly and never consider people who pay the higher rate of tax. But, if Reggie does as I suggest he will soon know where he stands at the end of a tax year.