Tax return and Personal Savings Allowance

benjus

Just started my 2016/17 tax return. I'm a higher rate taxpayer so AIUI I should have a £500 savings interest allowance.

When I first filled in the form I put in a rough estimate of the interest from my bank accounts and looked at the calculation. Then I went and got a more accurate figure (higher), changed it and went back to the calculation - I found that the tax due had gone up by £25 or so.

Now the amounts of interest in both cases were well under the £500 allowance (£120 or so), so I would have thought the change should have made no difference to the calculation. Am I wrong there?

Pennywise

Would be good if you could give us all the relevant info, i.e. amounts of income from each source. The new allowances have made the calculations fiendishly complicated and in some scenarios, HMRC's own software and tax calculation algorithms are wrong.

Dazed_and_confused

benjus

The PSA is not all it seems! It isn't actually a tax free allowance but is a new tax rate band where upto £1000 of savings interest is taxed at 0%.

It is also sometimes counted as using up some of your basic rate band so in some situations it pushes other income into a higher rate band than would be expected.

As pennywise says though would need some figures to know what's happened with you specifically.

xylophone

https://www.gov.uk/income-tax/check-youre-paying-the-right-amount

polymaff

xylophone wrote: »

https://www.gov.uk/income-tax/check-youre-paying-the-right-amount

Now, that's an oxymoron. :rotfl:

zagfles

Do you have large dividend income?

benjus

Hi all

Thanks for the replies.

I think I've realised what happened - on the first pass through the form I put the interest in the "paid net of tax" field out of habit. Then I remembered that interest is now paid gross so I moved it to the other field. I guess the first calculation was lower because it included a refund on the tax that would have been paid on the interest, but when I corrected it the tax refund disappeared so it appeared that I was being charged more tax.