Tax on Savings Interest

Daliah

It does apply to the current tax year, and I know it can be done as I have been doing it for the  last few years. Savings interest is unearned income and can be recorded as such. No need to call HMRC to get your PAYE code adjusted, but if you prefer calling them, that is obviously an option

RG2015

305_15 said:

I think that what ranciduk is trying to get to the bottom of is: 
Would she get a rollicking from HMRC for not contacting them after knowingly exceeding the interest threshold, and can she tell them to "shove it" if they actually do try to shift responsibility?

It is the responsibility of the tax payer to ensure that the correct tax is paid.

It is also the duty of the banks and building societies to report interest received to HMRC.

I know what I would do if I thought that had underpaid any tax, even if the FI or HMRC had made a mistake.

RG2015

Daliah said:

It does apply to the current tax year, and I know it can be done as I have been doing it for the  last few years. Savings interest is unearned income and can be recorded as such. No need to call HMRC to get your PAYE code adjusted, but if you prefer calling them, that is obviously an option

Okay, I understand what you are saying.

I had not considered that this would allow me to estimate my interest for the current year. The way interest rates are going, it would be quite a feat of forecasting to get it right. Nevertheless, if it was wrong I could not be to blame for having a dodgy crystal ball.

If they really mean next year for the second option, I find it very strange that they say that you can enter an estimate now for the tax year 2023/2024.

EthicsGradient

Dazed_and_C0nfused said:

You've totally misunderstood.

£1,500 is taxable.

The tax payable will depend on what other taxable income you have.

Most people can have taxable income of £17,310 before any tax is payable on interest.

You use these in the following order,

Personal Allowance

Savings starter rate band (0%)
Savings nil rate band* (0%)

*aka Personal Savings Allowance 

That isn't necessarily the order they're used in - HMRC put them in the order which works best for you, which depends on your other income. For instance, if you had:
£11,570 earnings
£4,000 interest
£3,000 dividends
then you get the full £5,000 savings starter rate band. Your earnings are £1,000 below the Personal Allowance, but, rather than apply that to your savings, it's applied to your dividends - because otherwise, the £2,000 dividend allowance wouldn't cover that, and you'd end up paying 7.5% on the remaining £1,000. So the savings starter rate band is applied first to your interest, which covers it all. And you end up paying no tax at all.

VKE

BACKTOBACK said:

If it helps anyone regarding Chase, i have just been on the chat service. The customer service is excellent but they did confirm very strict daily transfer limits of £25k
So it would take me 9 days to get my money out, probably longer as i suspect they would freeze the account before day 9 
So now i am looking for another account to put at least half the money in

Have a look at Cynergy (saving account) paying 1.20%, it's fixed for 12mths and you set it up linkedto your normal current account; they have increased the % numerous times in last month so I check regularly and open up a new account and then do an 'internal transfer and close the previous account - it takes minutes

305_15

VKE said:

BACKTOBACK said:

If it helps anyone regarding Chase, i have just been on the chat service. The customer service is excellent but they did confirm very strict daily transfer limits of £25k
So it would take me 9 days to get my money out, probably longer as i suspect they would freeze the account before day 9 
So now i am looking for another account to put at least half the money in

Have a look at Cynergy (saving account) paying 1.20%, it's fixed for 12mths and you set it up linkedto your normal current account; they have increased the % numerous times in last month so I check regularly and open up a new account and then do an 'internal transfer and close the previous account - it takes minutes

BACKTOBACK said:
 is it going to be a problem when i need to transfer over £200k to a solicitor for a house purchase?

BACKTOBACK

So i can either leave the whole £210k in Chase and when the time comes try and pay my solicitor by daily instalments of £25k.
Or move half to Cynergy / Marcus then transfer all the money to my Halifax current account, before paying the solicitor in one go.
Im think my Halifax current account would be frozen after one large payment from Cynergy followed by 5 large payments from Chase then being immediately transferred out?
There must be an easier way?
If i had know about the 25k daily withdrawal limit from Chase i would not have invested as much with them. I missed that in the terms.

305_15

BACKTOBACK said:

So i can either leave the whole £210k in Chase and when the time comes try and pay my solicitor by daily instalments of £25k.
Or move half to Cynergy / Marcus then transfer all the money to my Halifax current account, before paying the solicitor in one go.
Im think my Halifax current account would be frozen after one large payment from Cynergy followed by 5 large payments from Chase then being immediately transferred out?
There must be an easier way?
If i had know about the 25k daily withdrawal limit from Chase i would not have invested as much with them. I missed that in the terms.

You're putting the cart before the horse, from your info you haven't yet bought a house, why the panic? Leave the money with Chase for 6 months from the time of depositing your money, then leave 85K in and move the remainder elsewhere. 

 

BACKTOBACK

305_15 said:

You're putting the cart before the horse, from your info you haven't yet bought a house, why the panic? Leave the money with Chase for 6 months from the time of depositing your money, then leave 85K in and move the remainder elsewhere. 

 

fair point

masonic

BACKTOBACK said:

So i can either leave the whole £210k in Chase and when the time comes try and pay my solicitor by daily instalments of £25k.
Or move half to Cynergy / Marcus then transfer all the money to my Halifax current account, before paying the solicitor in one go.
Im think my Halifax current account would be frozen after one large payment from Cynergy followed by 5 large payments from Chase then being immediately transferred out?
There must be an easier way?
If i had know about the 25k daily withdrawal limit from Chase i would not have invested as much with them. I missed that in the terms.

The limit isn't stated in the terms, so it isn't your fault. Chase is introducing new features as it goes along, so CHAPS payments might not be far away. You won't be the only one with a need to empty your account quickly, especially if a better savings rate comes along in the next few months. At the moment, you need to start moving your money out of Chase a couple of weeks before it is needed. The easiest option would be to move the money to a current account in your name and then transfer it all to the solicitor once together in that account. Once your temporary high balance status expires then you'll have reason to move some of the money elsewhere anyway, and can do so over the course of a few days, and then will only need 4 days notice to get all of the remaining money out of Chase. Or, large transfers will be supported by that time. In any case, this is not an issue while you are still several weeks/months from needing the money.

If you are concerned about the reaction of Halifax to all of this money moving through your account, then you could always notify them in advance that you are buying a house and will therefore be moving the funds from various savings accounts via your current account to the solicitor and seek reassurance that this will be ok.