Do I need to tell the bank I am now a tax payer?

Maureen43

soulsaver wrote: »

Not sure this is appropriate...but congratulations :beer:

It is appropriate. It’s been a long time coming. Thank you!

Dazed_and_confused

Maureen43

You also have the starting rate of 0% on £5,000 of interest subject to what's available from your personal allowance after your employment income is taken into account.
Originally posted by ivormonee

Sorry, please could you explain this a bit more?

Tax on savings interest is more complicated than wages!

UK residents (with income less than £100,000) all get a Personal Allowance and then there are a variety of tax rates when income over the personal allowance is taxed.

Two of these relating to savings income are the starter savings rate and the personal savings allowance rate, both of which are taxed at 0%.

For example if you have (current tax year) salary of £13000 then you would pay basic rate tax on £1500 (difference between £13000 and PA of £11500).

But if you also had savings interest you would have to have £4501 before you would have any tax to pay on the interest.

You start with a maximum of £5000 starter savings rate band but £1500 is ignored because of the £1500 wages which have been taxed.

So £3500 is taxed at starter savings rate of 0%.

And another £1000 is taxed at 0% courtesy of the Personal Savings Allowance rate.

The final £1 is taxed at the savings basic rate of 20%.

If you can say (roughly) what your taxable salary for the current year and next year will be along with an estimate of your savings interest each year your tax bill can be estimated.

Dazed_and_confused

Roxy28

Can you give a example for say someone on £10,000 per year with a PA of £11,500

And
Someone on £13,000 with a PA of £11,500.

Assuming the person hasn't applied for Marriage Allowance and doesn't have other sources of income then they could have the following interest before paying tax,

£10000 wages/pension
£7500 interest with no tax to pay
(£1500 covered by remaining personal allowance, £5000 taxed at starter savings rate (0%) and £1000 taxed at Personal Savings Allowance rate (0%))

£13500 wages/pension
£4000 interest with no tax to pay
(£3000 taxed at starter savings rate (0%) and £1000 taxed at Personal Savings Allowance rate (0%))

roxy28

Dazed_and_confused wrote: »

Roxy28

Can you give a example for say someone on £10,000 per year with a PA of £11,500

And
Someone on £13,000 with a PA of £11,500.

Assuming the person hasn't applied for Marriage Allowance and doesn't have other sources of income then they could have the following interest before paying tax,

£10000 wages/pension
£7500 interest with no tax to pay
(£1500 covered by remaining personal allowance, £5000 taxed at starter savings rate (0%) and £1000 taxed at Personal Savings Allowance rate (0%))

£13500 wages/pension
£4000 interest with no tax to pay
(£3000 taxed at starter savings rate (0%) and £1000 taxed at Personal Savings Allowance rate (0%))

Thanks Dazed and confused thats really helpful,

No other income in my example and they are as close to the real income within a few pence, so your example is very relevent, and it would take a lot of savings to go anywhere near paying any savings tax from their very modest savings.