Questions on Tax, Self-Assessment, Child Benefit & Savings

buildingbee

Dazed_and_C0nfused said:

buildingbee said:

Dazed_and_C0nfused said:

I think you've got a basic misapprehension.

You don't pay tax on savings.

You pay tax (if necessary) on the interest you get from savings.

So if you have £30,000 in a bank account  and receive £1,000 in interest then your taxable income that HMRC are interested in is £1,000.  Not £30,000 or £31,000.  Just the £1,000 paid in interest by the bank.

If you earn £23k then yes, on interest of £1,200 you would pay tax as follows,

£1,000 x 0% = £0.00
£200 x 20% = £40.00

Total tax payable = £40.00

Ahh right I see. Now that makes a lot of sense to me.

So I ignore the actual savings amount (even if it went to £50-£60k), but just look at the interest I've earned.

So lets say I earned hypothetically  £3000 interest in a year and our combined salary was £30k (basic rate tax payer), we would calculate it as:-

£1000 x 0% = 0.00
£2000 x 20% = £400

Total tax payable = £400.00

Have I got this right?

Everything except the bit in bold.  You are each taxed independently so your combined salary doesn't matter.

In fact "salary" doesn't matter at all, it's taxable pay that counts and this can often be less than salary due to pension contributions.

If your wife earns in taxable pay £6,000 and has applied for Marriage Allowance she can have interest of £11,310 before she would actually have to pay any tax on it.

Got it! Thanks!  So we can safely say that we will never earn that sort of interest.  I'm so glad that this part has been explained, thank you.

So now I know that I don't need to worry about the savings going higher nor do I need to complete an SA return.  So my only issue is clarifying the child benefit part.  Have a look at this child benefit tax calculator and you'll see that it states that when including income, that it's not an exhaustive list.  Could you please help me in explaining what incomes I would need to add and include as a total?:-

[Deleted User]

You don’t have to complete that form. You are nowhere near £50100 income. One of you would have to have income (not savings) over that amount to have to repay child benefit. You are worrying needlessly!

buildingbee

purdyoaten2 said:

You don’t have to complete that form. You are nowhere near £50100 income. One of you would have to have income (not savings) over that amount to have to repay child benefit. You are worrying needlessly!

Thank you so much!  That's great! Really appreciate yours and Dazed_and_C0nfused's help in reassuring me.