Easy to fall into tax now.

Rich1976

Albermarle said:

Rich1976 said:

Daliah said:

You'll still get more interest than before.

Though whether you pay tax on it or not, your cash savings are losing purchasing power as inflation is a multiple of the best gross savings rates.

Though people need savings for all sorts of things regardless.

There are two seperate issues.

Of course having savings is better than not having savings.

However if you are the type to take an interest in your overall financial position, (as many posters on here do) then you will be aware that the value/spending power of any savings you have is going down. 
Although not as much as the value of investments has gone down......... 

exactly but if you are saving up for big purchases like a replacement car or home improvements as an example that money needs to go somewhere regardless of the inflation rate.

and yes unfortunately the performance of investments/ pensions this year plus the inflation rate has taken a bigger knock

2010

Choirgrl said:

I didn’t see the OP saying it was a problem. What it might mean for people is:
- Needing to keep in mind / plan for there being some tax to pay.
- A cash ISA potentially being useful, in a way which it wouldn’t have been previously.

Thanks Choirgrl, I was just pointing out now that rates are rising if you`re not too careful you could easily slip into tax on the interest.
Furthermore, it`ll come out of the blue if you`re on PAYG via a P800 in October next year.

Providers provide HMRC with savings interest from the current tax year in July/Aug 2023.
If you owe tax on interest you`ll get a P800 in Oct.2023.

I can see ISA`s coming back into favour.
NBS had 3.6% for a 1yr fix ISA the other day, that`s equal to 4.5% for a normal 1 yr fix.

wmb194

You only need £25,000 @ 4% to earn £1,000 in interest.

Just_caring

I thought if your income was under your personal allowance you could earn £5000 in interest before paying tax..

masonic

Just_caring said:

I thought if your income was under your personal allowance you could earn £5000 in interest before paying tax..

It's a total of £6000 tax free if your income is equal to your personal allowance, more if below it.

Sg28

2010 said:

Choirgrl said:

I didn’t see the OP saying it was a problem. What it might mean for people is:
- Needing to keep in mind / plan for there being some tax to pay.
- A cash ISA potentially being useful, in a way which it wouldn’t have been previously.

Thanks Choirgrl, I was just pointing out now that rates are rising if you`re not too careful you could easily slip into tax on the interest.
Furthermore, it`ll come out of the blue if you`re on PAYG via a P800 in October next year.

Providers provide HMRC with savings interest from the current tax year in July/Aug 2023.
If you owe tax on interest you`ll get a P800 in Oct.2023.

I can see ISA`s coming back into favour.
NBS had 3.6% for a 1yr fix ISA the other day, that`s equal to 4.5% for a normal 1 yr fix.

Im paying tax now on savings. So ill be moving some across into my wifes savings to keep below the 1k threshold. She has 5k allowance to use up. 

jimexbox

It's good opportunity to mention that those on certain benefits, there is a government backed 'help to save' scheme. Its a 4 year saving scheme, save upto £50 per month which attracts a bonus of 50p, for every £1 saved. 

Silverbullet036

The OP seemed a reasonable assumption given the rising interest rates. We have to be aware of what we've got saved up and how our tax bands are coping with those figures. In a rising interest rate environment this can change very quickly and it was a timely reminder to some to keep a wary eye out.

In our house we take advantage of my wife's spare allowance to keep things tax free. Although if rates keep going up as fast as they have recently we may have to move into ISA's

mcfly998

On the original subject of the post.

As a, single person, basic rate tax payer, on PAYE.  I now find that I will be one of these people.  I'll be going over the £1000 tax free interest limit, for the first time, next tax year (with ISA allowances maxed). 

My question is:  Do I have to fill in some kind of form to tell HMRC about it???

Or will my banks let HMRC know all my interest incomes for the year automatically? and HMRC then add them all up and adjust my tax code accordingly?  Surely, they can't be that proactive?

 

2010

mcfly998 said:

On the original subject of the post.

As a, single person, basic rate tax payer, on PAYE.  I now find that I will be one of these people.  I'll be going over the £1000 tax free interest limit, for the first time, next tax year (with ISA allowances maxed). 

My question is:  Do I have to fill in some kind of form to tell HMRC about it???

Or will my banks let HMRC know all my interest incomes for the year automatically? and HMRC then add them all up and adjust my tax code accordingly?  Surely, they can't be that proactive?

 

From my prevoius post.

Providers provide HMRC with savings interest from the current tax year in July/Aug 2023.
If you owe tax on interest you`ll get a P800 in Oct.2023 and your code will be adjusted the following April 2024 to recover the tax owed.
And yes the taxman will know all about your savings interest.