Gross/AER/NET ?! Confused student :/

studentsaver2007

Say, for example interest is:

Gross/AER - 3.9% Net - 3.12%

As a non-working, full time student, when it comes to savings, will I get an interest of 3.9% as I am a non taxpayer?

If so, how do I prove this to my bank?

& how does a money transfer between a current debit (no cheque book) account and building soc/other account work? My friends seem to think I can ask the bank for a cheque on my behalf. Is this true?

Aegis

Ask your bank for a form R85, fill that in, and you will be paid gross instead of having income tax deducted at the source.

aleph_0

studentsaver2007 wrote: »

Say, for example interest is:

Gross/AER - 3.9% Net - 3.12%

As a non-working, full time student, when it comes to savings, will I get an interest of 3.9% as I am a non taxpayer?

If so, how do I prove this to my bank?

& how does a money transfer between a current debit (no cheque book) account and building soc/other account work? My friends seem to think I can ask the bank for a cheque on my behalf. Is this true?

Get an R85 form (available on the inland revenue website), where you declare your income for the Tax Year will be less than about £5k (the amounts for this year come with the form), fill in the details, and give it to your bank.

Sorry if this advice sounds slightly patronizing, but looking into ensuring you have used your ISA allowance, and if you have used that, get an account with a higher rate than 3.9% (well worth reading the articles on the website).

I believe you can get a cheque from the bank on your behalf to withdraw money from a savings account. You could also use electronic transfer (you tell them the account details, they'll move the money).

studentsaver2007

Thanks for the help!

I don't know about ISAs, I find that without paying tax on interest, some long term saving accounts will give me higher interest rates than an ISA.

I had no idea about this R85 form, does this mean that my current account has been taxed for the past 2 years (since I turned 16) because I haven't announced that I'm not a taxpayer?

caliston

If you're ever likely to have any money saved once you stop being a student and start earning an ISA might be worthwhile, because any further interest will be tax free. And you can only pay in £3000 each year (from £3600 next year) so if you use a part of this year's allowance you'll have a full allowance free for when you start earning. Some ISAs can be as flexible as savings accounts, though make sure the amount of money paid in (even if you withdraw it later) won't exceed £3000. The reduction in interest if you pay tax will probably wipe out any saving by having a slightly higher rate - do the sums to see which is best for you.

Unless your parents filled in a form for you when you were under 16, you have probably been paying tax on your interest - look for tax deductions on your statements. However you can claim back the last 6 years' worth with TaxBack. Sometimes banks send interest statements in April saying how much tax has been deducted that year - those will help with your claim.