Self Assessment - Interest

antuk

Hi all.

I wonder if anyone can clear up my confusion on the Personal Savings Allowance. As I understand it, interest is paid Gross now because of the PSA

So on the SA form does it get entered under the
1. Taxed UK interest etc. Enter net amount after tax has been taken off
2. Untaxed UK interest etc (amounts which have not been taxed). Enter total amount

Thanks all,
Anthony

pramsay13

If interest is paid gross it has not been taxed yet, so it would go into 2.

00ec25

Box 2 Untaxed UK interest etc – amounts which have not had tax taken off
If you have an account that pays you gross interest (for example, a bank or building society account), put the gross amount in box 2.

https://www.gov.uk/government/publications/self-assessment-tax-return-sa100

JIMBOB43

If you put the amount into the untaxed box the calculation will tax the interest declared, despite it being 0% tax as part of the £1000 personal tax allowance?

Dazed_and_confused

JIMBOB43

If there is no spare Personal Allowance then yes it will get taxed. Savings interest which is all taxable just as it was before the "Personal Savings Allowance" was introduced.

The PSA isn't actually an "allowance" it's a 0% tax rate similar to the £5000 starter savings 0% rate some people can benefit from.

Dorian1958

Despite reading this thread and the SA100 guidance I must be thick, because I don't understand the £1000 PSA when completing SA. Mrs Dorian has completed her SA online and included her untaxed bank interest of £737 (so well below the £1000 PSA) as required in box 2. This has been added to her net property income (after allowable expenses) to produce a figure which is just over her personal tax allowance, resulting in a tax bill of £145. If the savings interest was not included she would not have a tax bill to pay. Is she not entitled to the £1000 PSA because her rental income untaxed savings income exceeds her personal allowance? Or has she completed SA incorrectly?

Dazed_and_confused

Based on your post your wife is not able to benefit from the Personal Savings Allowance (which is a 0% tax rate not an allowance in the normal sense).

She would however seem to be able to benefit from the starter savings rate band, a totally different 0% rate band specifically for savings income.

What else have you entered on the return, did your wife make any charitable payments?

Dorian1958

Thanks Dazed&Confused. How does she go about benefiting from the starter savings rate band of 0%? Still a bit confused; I am a PAYE tax payer and have savings interest of a similar amount to Mrs Dorian, but this is not included in my overall "income" for tax purposes, whereas her interest is taken into account and this pushes her into taxable territory. Unless I should be declaring my savings interest also?


As for the 16/17 SA return, she has made regular charitable donations of £10 per month but at the point of setting this up she was not a tax payer so could not sign the Gift Aid declaration. Thus the charitable donations did not go on the return, she only realised she became a tax payer on completing the SA calculation. Going forward for SA 17/18 she will now sign Gift Aid declarations as a tax payer. So I suppose she could have saved £120 in tax if she had known she was going to be a tax payer.

Dazed_and_confused

The starter savings rate should be given automatically in the calculation.

You probably should be be declaring any untaxed income but if you earned (wages/pension/state pension/company benefits) more than £16000 in 2016:17 you will probably be able to benefit from the Personal Savings Allowance (might be different if your total income is £43000+).

If gift aid hasn't gone on her tax return then either you've not mentioned something relevant or HMRC's calculation is wrong.

And basic rate payers don't "save" any tax by making gift aid payments, it's just the charity that benefits really in that situation.

Can you provide all the income (and any tax deducted at source) entries on the return and say if your wife applied for Marriage Allowance for 2016:17, either on the SA return or previously?

Dorian1958

Under income
Untaxed UK interest = £737
Total of any taxable State pensions and benefits = £3229
Under property income
Net Taxable profit for the year from property = £7339
Total tax to pay £145.60
She transferred her Marriage Allowance to me before tax year 16/17 because she was a non tax payer, obviously this has reduced her personal allowance.
Ignoring the savings interest, is it just because her property income + carers allowance minus her personal allowance results in her having a tax liability?

glider3560

Dorian1958 wrote: »

Under income
Untaxed UK interest = £737
Total of any taxable State pensions and benefits = £3229
Under property income
Net Taxable profit for the year from property = £7339
Total tax to pay £145.60
She transferred her Marriage Allowance to me before tax year 16/17 because she was a non tax payer, obviously this has reduced her personal allowance.
Ignoring the savings interest, is it just because her property income + carers allowance minus her personal allowance results in her having a tax liability?

Pension/Benefits + Property = £10568
Personal allowance that year was £11000. Reduced to £9900 by the marriage allowance.
10568 - 9900 = £668
668 * 20% = £133.60 tax due

Are there any other entries on the tax calculation page? Can you copy all the details from there so we can understand how HMRC have done the calculation.