Declaring Tax on Savings

realaledrinker

chrismac1 wrote: »

Now for those newbies to the UK tax system reading this, what you should realise is what happens when this stupid database gets its sums wrong like this for 2 or 3 years then suddenly figures out how idiotic it has been.

Ah yes but that would be based on the situation before all their IT contractors left when they tried to put them on an IR35 basis? :rotfl::rotfl:

ricky101

Hi,

Just an add on to this topic, out of the blue received a letter today from HMRC saying that they will calculate any tax due on savings interest earned, stating that I can earn up to £1000 tax free.

However seems strange that knowing we are non working pensioners, they do not mention the £5000 savings interest allowance ?
Also no mention about this in any of the comments about Yorkshire Travellers situation ?
Or have we totally missed the point ?
https://www.gov.uk/apply-tax-free-interest-on-savings

xylophone

https://www.taxation.co.uk/Articles/2017/05/02/336348/tax-relief-savings-and-dividends

polymaff

ricky101 wrote: »

Hi,

Just an add on to this topic, out of the blue received a letter today from HMRC saying that they will calculate any tax due on savings interest earned, stating that I can earn up to £1000 tax free.

However seems strange that knowing we are non working pensioners, they do not mention the £5000 savings interest allowance ?
Also no mention about this in any of the comments about Yorkshire Travellers situation ?
Or have we totally missed the point ?
https://www.gov.uk/apply-tax-free-interest-on-savings

You'd have to quote that letter verbatim. Then you might receive meaningful analysis.

As regards your and the OP's circumstances, neither you nor the OP have detailed your income breakdown sufficiently to let us know whether it might be worthwhile broadening the discussion beyond the OP's original, specific, query.

When it comes to the SRA - at least for 2016/17 - there be dragons

polymaff

chrismac1 wrote: »

2. A 1 out of 10 tax service.

You must be becoming mellower in your old age, Chris. I'd make the current level of service -10 out of 10.

Never mind, EVERYTHING will be fine after that software "fix" that they plan to put online on 23rd October.

Must be true, this bloke from HMRC told me so. :rotfl:

ricky101

Hi,

Apologies if my previous post was not clear enough, it was just a simple question about that 5k saving allowance and why the tax office send a letter out about savings interest, mentioning the 1k allowance of basic tax payers, but nothing about the 5k allowance ?

Perhaps if I could ask in a different way by means of an example.

Say in this tax year, someone, non working, with just a state pension of 10k and the personal allowance of 11.5k but has non isa saving interest of 4k, would they have to pay income tax on the 2.5k above the p.a. of 11.5k ?

According the the Gov.uk link I posted they would not, but they do not give any clear indication if this savings allowance will remain in future years , or as Xylophones link shows the 5k Dividend allowance will drop to 2k next year


thanks

badmemory

No they shouldn't, but it is just another HMRC system whoops which actually normally gets sorted before you (or she) get billed.

polymaff

ricky101 wrote: »

Say in this tax year, someone, non working, with just a state pension of 10k and the personal allowance of 11.5k but has non isa saving interest of 4k, would they have to pay income tax on the 2.5k above the p.a. of 11.5k ?

No, first they would get the first £1,500 of taxable savings interest taxed at 0% covered by the remainder of the personal allowance, then they'd get the remaining £2,500 of taxable savings interest taxed at 0% due to the SRA. By the way, they'd still be left with £2,500 of SRA and £1,000 of PSA - so there's another £3,500 of taxable savings interest that would get away with 0%.

ricky101 wrote: »

According the the Gov.uk link I posted

There's your first mistake - trusting anything on GOV.UK. Quite seriously, they are outrageously inept. As for the future - ask me when we get there

Same answer about the letter - need to see its content.

ricky101

polymaff wrote: »

Same answer about the letter - need to see its content.

Thanks,

Unable to load a copy of the letter, seems you cannot load a pic direct and do not use the photo sites etc.

It was more why they had sent it now, its not as if we have knowingly done anything tax wise to trigger such a letter, equally seems an odd one to just send out a a circular ?

It just talks mainly about its changes and the only figures it mentions are the 1k and 500 PSA rules
At the bottom of the letter is references BBSI 1 HMRC 08/2017

Never knew the gov.uk was so bad !

polymaff

OK with the tax calculation?

I'd hoped that you might be able to scan and OCR the form. I guess that BBSI stands for Bank and Building Society Interest - a common acronym in tax. Don't look for logic as, I agree, PSA and SRA are all related to BBSI !

Perhaps it relates to HMRC's continuing inability to process PSA and SRA in online SA100 submissions (or in paper ones - despite their promises)

It's an Alice in Wonderland world HMRC lives in.

The White Rabbit promises that it will all be fixed in the "fix" software they're fielding on 23rd October - i.e. over 6 months too late. The bad news is that they now recognise that this "fix" has uncovered 14 more errors - including four which have arisen due to the "fix"ed version itself.