When MSE says 95% don't pay tax on savings.......

bugfriendlygardener

do they mean that 95% of the population don't have the amount of savings required to pay tax (eg £66k for basic-rate taxpayers), OR, that more than the 5% already have more tucked away in non tax paying accounts, eg ISAs or NS&I investments etc

RG2015

bugfriendlygardener wrote: »

do they mean that 95% of the population don't have the amount of savings required to pay tax (eg £66k for basic-rate taxpayers), OR, that more than the 5% already have more tucked away in non tax paying accounts, eg ISAs or NS&I investments etc

If 5% earned less interest than their own interest tax threshold and a further 5% had tax fee savings such as ISAs then 90% would not pay tax on their interest.

bowlhead99

"95% don't pay tax on savings" if taken at face value means that only 5% of people have enough money in non tax-protected accounts to generate enough taxable interest to exceed their various allowances. So that 5% will need to pay some tax on their savings, while the 95% won't.

The other 95% of people who are not in that 5%, will include people who don't have much if anything in the way of savings at all, and also people who have lots of savings but keep enough of them protected from tax to not exceed their various allowances.

Albermarle

There are also people like me , who have the vast majority of savings interest sheltered in ISA's but who last year paid a very small amount of tax on savings after a miscalculation
Not sure how that would be included in the 5% , or not.

capital0ne

Or people who have large sums of money not earning any interest, for example 'under the mattress!'

londoninvestor

bowlhead99 wrote: »

"95% don't pay tax on savings" if taken at face value means that only 5% of people have enough money in non tax-protected accounts to generate enough taxable interest to exceed their various allowances. So that 5% will need to pay some tax on their savings, while the 95% won't.

The other 95% of people who are not in that 5%, will include people who don't have much if anything in the way of savings at all, and also people who have lots of savings but keep enough of them protected from tax to not exceed their various allowances.

Last year, 71% of households had less than £10k in savings.

So the substantial majority of the 95% will be people who just don't have enough saved to come close to earning interest that would exceed the PSA. Some of the rest will of course be those who have substantial savings tax-sheltered.