Bank interest on personal tax account online
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Thanks for your reply and I am genuinely trying to understand the points you are making but I am struggling.Dazed_and_confused wrote: »My tax is not complicated. I am a basic rate taxpayer with a private pension, MAT and annual interest received under £1,000
In this situation it is entirely possible, quite likely even a lot might say, that you wouldn't be able to benefit from the Personal Savings Allowance rate band so the £1,000 figure is irrelevant.
What would be relevant is whether you have any additional tax to pay overall.
Also, although ultimately it probably won't make any different I personally think this is an odd way of going about things,
My only concern is that I have to deduct 50% of the interest received on my joint accounts to bring it down to less than £1,000
If you only added the interest which is applicable to you then there would be no need to deduct anything. Just seems an unusual way of calculating things.
First, can you suggest a possible way in which the £1,000 PSA is irrelevant for me and what may cause me to have any additional income to pay?
Second, the annual summary for my joint account states that the gross interest paid from 06/04/2016 to 05/04/2017 is £457.25. Surely my only option is to deduct half of this figure to come to my individual interest received.
I accept that you may find my approach odd and unusual but I would appreciate it if you could explain why you have come to this conclusion?0 -
As a MAT recipient you are clearly a "young" pensioner. You might for example have the following income.
Private pension £8000
State Pension. £6000
Savings interest £900
You will pay basic rate tax on some of your pension income but because it is relatively small, from a tax perspective, you have some of the £5000 starter savings rate band available so your interest will be taxed at 0% by virtue of this.
In this situation you simply don't have enough income to be able to use the Personal Savings Allowance. You're not any worse off but it isn't relevant to a lot of people.
An older pensioner may get the Married Couple's Allowance and have more income,
Private pension £24000
State pension. £6000
Savings interest £900
In this situation the Personal Savings Allowance rate band is applicable (the pension income amounts mean the starter savings rate is not available) and means no tax is payable on the interest but the amount of Married Couple's Allowance due is income based so the £900 of taxable savings interest will reduce the Married Couple's Allowance by £450 which will add £45 to the overall tax bill.
NB. Married Couple's Allowance is much larger than MAT but tax relief is given at 10% instead of the 20% used for MAT.0 -
Dazed_and_confused wrote: »An older pensioner may get the Married Couples Allowance and have more income,
Private pension £24000
Why do you suggest a private pension of £24,000? As long as the total income from all sources is under the higher rate threshold of £46,350 then the PSA of £1,000 remains relevant for determining the income tax liability.0 -
Second, the annual summary for my joint account states that the gross interest paid from 06/04/2016 to 05/04/2017 is £457.25. Surely my only option is to deduct half of this figure to come to my individual interest received.
If those are the dates you mean, then your tax return is overdue.
HMRC won't argue with a 50/50 split but you can report any split - so long as you can justify it in terms of how the account was funded.
By the way, don't use unique / faulty terminology. It'll only confuse everyone - including yourself. "deduct" is the wrong word. What is one party's interest was never the others. The word is "split"
IMHO, you really need the discipline of completing SA.0 -
Why do you suggest a private pension of £24,000?
I submitted the post incomplete sorry - now updated to fill in the additional information!
As long as the total income from all sources is under the higher rate threshold of £46,350 then the PSA of £1,000 remains relevant for determining the income tax liability.
We'll have to agree to disagree on this. The Personal Savings Allowance rate band simply isn't relevant to lower income individuals. They are not losing out because of this but if you don't have sufficient income then the fact is you cannot make use of the PSA.0 -
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