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QUERY: tax in current accounts
andwan0
Posts: 35 Forumite
I am selling my flat, and will complete at the end of this month. I will have a large equity to be transferred back to my bank account.
will my equity be taxed while in the current account? if so, how much? or is it the interest that will get taxed?
will my equity be taxed while in the current account? if so, how much? or is it the interest that will get taxed?
0
Comments
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What sort of tax are you worried about? Money doesn't get taxed merely by being in a bank account. If you earn interest on it then the bank will deduct basic rate tax from the interest. If you're due to pay capital gains tax on the sale (which you won't if it's always been your principal residence) then that's something you'll need to sort out irrespective of where the money is.0
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no your balance on your bank account will not be taxed just because it has increased due to the money from a house sale being there. Just the same as the money in your current account will not be taxed if you had a pay rise and the balance went up that way
yes the interest earned on the balance is taxable, but whether you actually have to pay tax depends wholly on whether by the end of the tax year you have earned more that the tax free interest "allowance" of £1,000 if you are a basic rate taxpayer0 -
the bank will deduct basic rate tax from the interest.
No, they won't. Interest on bank and savings accounts is now paid gross.
https://www.gov.uk/government/publications/personal-savings-allowance-factsheet/personal-savings-allowance
The OP should read the above.
He should also read
https://www.fscs.org.uk/what-we-cover/questions-and-answers/qas-about-temporary-high-balances/
If the sum is substantial, he may prefer to hold it in NS&I where he won't need to worry about savings protection.0
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