The Top Fixed Interest Savings Discussion Area

RG2015

auser99 said:

@RG2015, let me ask a new question.
From the many people who have told you how it works, do you now accept the answer?

So we can get back to reading about gloriously high new fixed rates 

It is irrelevant whether I accept answers from a group of strangers on a public forum. 

I am simply saying that HMRC do not make this at all clear. I would much prefer an unambiguous statement from HMRC.

I will respond with the following question.

Do you acknowledge that the following statement from the HMRC website implies all interest including ISA interest?

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

auser99

I'm out...can someone else have a try? 

Troytempest

gone off topic..........

InvesterJones

EthicsGradient said:

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.

Actually that depends on the fund. Vanguard lifestrategy for example pay out as dividends rather than interest.

But on the other hand there are certainly many funds that pay out as interest which counts in this instance.

Secret2ndAccount

RG2015 said:

auser99 said:

@RG2015, let me ask a new question.
From the many people who have told you how it works, do you now accept the answer?

So we can get back to reading about gloriously high new fixed rates 

It is irrelevant whether I accept answers from a group of strangers on a public forum. 

I am simply saying that HMRC do not make this at all clear. I would much prefer an unambiguous statement from HMRC.

I will respond with the following question.

Do you acknowledge that the following statement from the HMRC website implies all interest including ISA interest?

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

Instead of repeatedly posting on this forum, why don't you report your concerns to HMRC? Every page on their site has a button near the bottom marked 'Report a problem with this page'
Here is the page you want to report:
https://www.gov.uk/check-if-you-need-tax-return/y/no/no/less-than-50-000/no

The_Green_Hornet

Vanquis have increased their 2 year bond to 4.88%

VNX

Smartsave one year up to 4.87

Rollinghome

RG2015 said:

auser99 said:

@RG2015, let me ask a new question.
From the many people who have told you how it works, do you now accept the answer?

So we can get back to reading about gloriously high new fixed rates 

It is irrelevant whether I accept answers from a group of strangers on a public forum. 

I am simply saying that HMRC do not make this at all clear. I would much prefer an unambiguous statement from HMRC.

I will respond with the following question.

Do you acknowledge that the following statement from the HMRC website implies all interest including ISA interest?

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

I wouldn't use the word "imply" but it certainly doesn't make clear that it doesn't include anything within an ISA. 

But then that's tax and HMRC for you.  Anyone doing a tax return, especially if they've a few foreign stocks or ex-UK domiciled ETFs, will find a lot of things unclear, and some questions that simply don't make sense. Such as either/or questions where neither option applies, but you can't complete the return without answering with one or the other.

On your point, HMRC might say that any attempt to make the statement comprehensive would then imply that any obscure situation they omitted was, or wasn't, to be included in the return. Taxation is fiendishly complicated, which is why there's a large industry of accountants and lawyers offering advice.

On https://www.taxationweb.co.uk/ (where you could ask your question) you'll find professionals arguing over the meaning of some pages and if you go to the HMRC forum for taxpayers, the staff can often tell you they don't know either, so phone. When it's a question of tax law, cases may end up in the high courts. Remember HL's squabble over the taxation of fund rebates? (HL lost, despite the opinion of their lawyers.)

Since the end of interest being taxed at source, and now with the increase in interest rates and lowering of investment allowances, many people will have to complete returns for the first time. So it should be something that the average person can do unaided, and still it's often far from that. 

The reply from HMRC is likely to be unsympathetic, if you can't do it yourself then get an accountant. One way to help avoid that cost is to get as much as possible into an ISA.

PS.  ISAs aren't completely tax-free of course, we're still charged 0.5% Stamp Duty Reserve Tax on some, but not all, buys.

EthicsGradient

InvesterJones said:

EthicsGradient said:

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.

Actually that depends on the fund. Vanguard lifestrategy for example pay out as dividends rather than interest.

But on the other hand there are certainly many funds that pay out as interest which counts in this instance.

It depends on whether the fund is above or below 60% invested in bonds, not on what the manager names the payout. For Vanguard's LifeStrategy fund that is nominally invested in 40% shares, 60% fixed interest investments, they'd need to tell you which side of the line it falls.

francoghezzi

Hampshire Trust Bank with an interesting 5 year Bond 4.75%
Interest paid annually