The Top Fixed Interest Savings Discussion Area

RG2015

TiVo_Lad said:

See https://www.gov.uk/individual-savings-accounts/how-isas-work

"If you complete a tax return, you do not need to declare any ISA interest, income or capital gains on it."

Yes, but you are missing my point. I am talking about ISA interest counting toward the HMRC £10,000 threshold for completing an SA return.

This is separate from what does or doesn’t go on the SA return.

RG2015

Apologies for the continued deviation from topic, but I hope it is of interest to most subscribers.

Bigwheels1111

RG2015 said:

TiVo_Lad said:

See https://www.gov.uk/individual-savings-accounts/how-isas-work

"If you complete a tax return, you do not need to declare any ISA interest, income or capital gains on it."

Yes, but you are missing my point. I am talking about ISA interest counting toward the HMRC £10,000 threshold for completing an SA return.

This is separate from what does or doesn’t go on the SA return.

Next year when I go over the 10K, I will only add the amount from standard savings and not ISA'S.

I rang HMRC to check this 3 weeks ago.

I will keep recors of ISA interest in case of any problems.

Dazed_and_C0nfused

RG2015 said:

Dazed_and_C0nfused said:

RG2015 said:

Dazed_and_C0nfused said:

SonOfPearl said:

Dazed_and_C0nfused said:

RG2015 said:

SonOfPearl said:

TheBanker said:

Gollygumdrops said:

Thanks TiVo_Lad.  To ensure I don’t reach £10K interests maybe I need to go on a spending splurge! 😄😆
Now, where are those cruising and jewellery brochures?

If you want to stay below £10k to avoid having to fill in a Self Assessment return (although it's an easy task if you've kept your paperwork organised), remember any interest earned from ISAs doesn't need to be declared. So rather than a cruise, you could stick £20k in an ISA if you don't already have one... although a cruise would be more fun!

Also, if you are taking out 12 month fixes now the interest will be paid in the next tax year (2024/5). You will be able to put another £20k in an ISA after 5 April 2024, further reducing your taxable interest. 

Is the highlighted really true? The Gov.uk guidance says nothing about excluding interest earned on ISAs from the £10k total. It simply says "You need to register for Self Assessment if your income from savings and investments is over £10,000." Genuine question. I am trying to figure out if I might need to complete a Self Assessment return in the future if rates keep going up. 

The HMRC rules are clear.

You need to register for Self Assessment if your income from savings and investments is over £10,000. Check if you need to send a tax return if you’re not sure.

No mention of ISAs at all.

The forum expert on tax is  @Dazed_and_C0nfused if you want a more authoritative answer.

To be fair the question could probably be better worded to specify taxable income from savings and investments.

But as tax is all about taxable income not tax exempt income it probably seemed too obvious to whoever writes the gov.uk guidance.

Also, instead of this question from @SonOfPearl there would loads of people asking do I include the first £1,000-£6,000 when calculating the £10,000 as they will (mistakenly) be thinking of that income that could be taxed at 0% as tax free so not relevant.

@Dazed_and_C0nfused Sorry to labour this off topic point, but just so I'm understanding this right; you only need to complete a tax return if your taxable income from savings and investments is over £10,000? Then income from ISAs can be ignored? TIA.

Well there are lots of other reasons for having to complete a tax return (self employment, HICBC, taxable income > £100k etc etc) but if none of them apply and your taxable interest is say £8,500 then you wouldn't need to register and complete one just because of savings interest.

If you had a further £2,000 interest from an ISA that would be irrelevant (assuming you had stuck to the ISA conditions).

If however HMRC decide to send you a return them you must either complete it or ask them to withdraw it if you think it has been issued in error.  Ignoring it because you think it doesn't apply is the way to a whole load of grief.

Thank you for the response. It is comprehensive, but dare I suggest that you have clouded the issue by adding in the other reasons.

In the interests of clarity, can I ask if, in your opinion the following statement is correct.


You need to register for Self Assessment if your taxable income from savings and investments is over £10,000.

Yes.  But with one caveat.

Dividends are a separate element, that isn't what is meant by investments.

So interest £8,000 and dividends of £3,000 don't require you to voluntary register for Self Assessment if no other criteria exist.

See for tax year 2016-17 onwards here,

https://www.gov.uk/hmrc-internal-manuals/self-assessment-manual/sam100060

Thanks. But other than dividends, what other investment income would count towards the £10,000?

Interest paid on a general investment account, as opposed to a vanilla savings account?

Interest from P2P lending?

auser99

RG2015 said:

TiVo_Lad said:

See https://www.gov.uk/individual-savings-accounts/how-isas-work

"If you complete a tax return, you do not need to declare any ISA interest, income or capital gains on it."

Yes, but you are missing my point. I am talking about ISA interest counting toward the HMRC £10,000 threshold for completing an SA return.

This is separate from what does or doesn’t go on the SA return.

ISA interest in effect does not exist as far as HMRC are concerned. You don't need to mention it, it doesn't trigger anything, you don't need to put it on forms, it doesn't shape what you need to do in any process with them.

TiVo_Lad

RG2015 said:

TiVo_Lad said:

See https://www.gov.uk/individual-savings-accounts/how-isas-work

"If you complete a tax return, you do not need to declare any ISA interest, income or capital gains on it."

Yes, but you are missing my point. I am talking about ISA interest counting toward the HMRC £10,000 threshold for completing an SA return.

This is separate from what does or doesn’t go on the SA return.

As the quote from the website says "you do not need to declare any ISA interest". The website answers your question.

RG2015

auser99 said:

RG2015 said:

TiVo_Lad said:

See https://www.gov.uk/individual-savings-accounts/how-isas-work

"If you complete a tax return, you do not need to declare any ISA interest, income or capital gains on it."

Yes, but you are missing my point. I am talking about ISA interest counting toward the HMRC £10,000 threshold for completing an SA return.

This is separate from what does or doesn’t go on the SA return.

ISA interest in effect does not exist as far as HMRC are concerned. You don't need to mention it, it doesn't trigger anything, you don't need to put it on forms, it doesn't shape what you need to do in any process with them.

The average person would not assume that ISA interest in effect does not exist as far as HMRC are concerned.

Surely common sense dictates that HMRC should make this clear for everyone to understand.

If they talk about £10,000 interest received how many people would jump up and say.

" But remember that ISA interest is excluded because ISA interest in effect does not exist as far as HMRC are concerned"

Thumbs_Up

Thumbs_Up said:

One piece of the jigsaw is missing for me and that is NS&I. They have been given a directive to attract more inward investment. Just wish they would get their finger out and get on with it.

 I do wonder if they have received a large inflow of cash due to the recent banking issues going on in America and Europe.

I called it, from the Telegraph.

 “Yesterday Bank of England data shows £4.8bn was withdrawn from bank accounts in March alone, with £3.5bn of that moving into NS&I, the Treasury-backed institution that runs Premium Bonds”.

https://www.telegraph.co.uk/pensions-retirement/news/billions-of-pounds-is-flowing-into-nsi-pension/#comment

EthicsGradient

RG2015 said:

Dazed_and_C0nfused said:

RG2015 said:

Dazed_and_C0nfused said:

SonOfPearl said:

Dazed_and_C0nfused said:

RG2015 said:

SonOfPearl said:

TheBanker said:

Gollygumdrops said:

Thanks TiVo_Lad.  To ensure I don’t reach £10K interests maybe I need to go on a spending splurge! 😄😆
Now, where are those cruising and jewellery brochures?

If you want to stay below £10k to avoid having to fill in a Self Assessment return (although it's an easy task if you've kept your paperwork organised), remember any interest earned from ISAs doesn't need to be declared. So rather than a cruise, you could stick £20k in an ISA if you don't already have one... although a cruise would be more fun!

Also, if you are taking out 12 month fixes now the interest will be paid in the next tax year (2024/5). You will be able to put another £20k in an ISA after 5 April 2024, further reducing your taxable interest. 

Is the highlighted really true? The Gov.uk guidance says nothing about excluding interest earned on ISAs from the £10k total. It simply says "You need to register for Self Assessment if your income from savings and investments is over £10,000." Genuine question. I am trying to figure out if I might need to complete a Self Assessment return in the future if rates keep going up. 

The HMRC rules are clear.

You need to register for Self Assessment if your income from savings and investments is over £10,000. Check if you need to send a tax return if you’re not sure.

No mention of ISAs at all.

The forum expert on tax is  @Dazed_and_C0nfused if you want a more authoritative answer.

To be fair the question could probably be better worded to specify taxable income from savings and investments.

But as tax is all about taxable income not tax exempt income it probably seemed too obvious to whoever writes the gov.uk guidance.

Also, instead of this question from @SonOfPearl there would loads of people asking do I include the first £1,000-£6,000 when calculating the £10,000 as they will (mistakenly) be thinking of that income that could be taxed at 0% as tax free so not relevant.

@Dazed_and_C0nfused Sorry to labour this off topic point, but just so I'm understanding this right; you only need to complete a tax return if your taxable income from savings and investments is over £10,000? Then income from ISAs can be ignored? TIA.

Well there are lots of other reasons for having to complete a tax return (self employment, HICBC, taxable income > £100k etc etc) but if none of them apply and your taxable interest is say £8,500 then you wouldn't need to register and complete one just because of savings interest.

If you had a further £2,000 interest from an ISA that would be irrelevant (assuming you had stuck to the ISA conditions).

If however HMRC decide to send you a return them you must either complete it or ask them to withdraw it if you think it has been issued in error.  Ignoring it because you think it doesn't apply is the way to a whole load of grief.

Thank you for the response. It is comprehensive, but dare I suggest that you have clouded the issue by adding in the other reasons.

In the interests of clarity, can I ask if, in your opinion the following statement is correct.


You need to register for Self Assessment if your taxable income from savings and investments is over £10,000.

Yes.  But with one caveat.

Dividends are a separate element, that isn't what is meant by investments.

So interest £8,000 and dividends of £3,000 don't require you to voluntary register for Self Assessment if no other criteria exist.

See for tax year 2016-17 onwards here,

https://www.gov.uk/hmrc-internal-manuals/self-assessment-manual/sam100060

Thanks. But other than dividends, what other investment income would count towards the £10,000?

Perhaps their "savings and investments" wording is intended to cover the income from funds with over 60% invested in bonds. Many people wouldn't call those "savings", but that income is assessed the same as interest from savings.

auser99

@RG2015, The gov site does clearly state you don't pay tax on ISAs and if you do a tax return you don't need to declare any ISA interest.

I think you're asking for another line saying something like, "if you earn over 10k a year in interest to trigger needing to fill a self assessment out - ISA interest does not need to be included in this amount"