Should I be doing anything?

ydraigcoch

Hi,

I started a new job about a year ago now, which put me into the High Tax Band. So I am now paying 40% Tax on my earnings. But how do they know about my savings? I have my ISA but other savings I have, have been getting interest. Do I need to declare this?

I am about to put all my savings into my Wifes accounts who soon will not be working.

Also is there anything I should do to help reduce my tax bill?

CLAPTON

you need to fill in a tax form to tell the HMRC about your savings (except the ISAs which dont need to be declared)

if your wife pays tax at a lower rate or not at all then transferring the money to her will reduce the tax

If she has no income at all in this tax year she should fill in an R85 so the interest can be paid gross.

Murdina

if you are not already within self assessment you must tell HMRC within 6 months of the end of the tax year that you have the savings. Easiest of course to call them now and they can probably deal with the tax by coding in if your circumstances are otherwise uncomplicated (they will code in up to 10k of interest if they can I believe and that may mean you do not have to come within the self assessment system).
Have you thought about personal pension payments if you do not make them already as the economics of making these obviously improves if you can get higher rate relief on the payments. An IFA would obviously help you here. If you make any gift aid payments to charity then you get higher rate relief on these too so do not forget to mention these when you tell HMRC about the interest.

Toni_Tax

I would advise not to pay the higher rate tax through you tax code but through self assessment. If you pay it through the tax code the Revenue get the tax in the year it is due whereas through self assessment the tax man gets the money in the january following the end of that tax year, leaving you at a much better cash flow advantage (if with a bill that is payable in one go).

olly300

Toni_Tax wrote: »

I would advise not to pay the higher rate tax through you tax code but through self assessment.

Also if the amount of savings/other income varies yearly then the taxman will tax you incorrectly and they could owe you money.