Could the government raise the limit for tax free savings?

friolento

Malthusian said:

A salary of about £60k would incur £12k in income tax (£61.5k, to be precise). And both of you were way off about NI, a salary of £60,000 incurs £11,743 in National Insurance.

The MSE tax calculator suggests you are way off about NI

Malthusian

MattMattMattUK said:

No, because those would be daft. 

Citation needed. Opal Fruits was a much better name. Starburst sounds like a My Little Pony.

But streamlining the process would make a lot of sense. 

That was what Osborne did when he changed the system. It meant that the majority no longer had any tax to pay on interest, and saved non-taxpayers the bother of reclaiming the 20% tax that had previously been deducted at source.
The general principle is that the less income you have, the less hassle you should have with the taxman. If non-taxpayers have to submit a form as a result of their interest income while richer basic rate taxpayers don't, in order to pay the correct amount of tax, the system has been designed poorly.
Of course, it doesn't work so well when the amount of interest people receive goes up and the interest rate allowance goes down thanks to fiscal drag. But I would be surprised if the Tories undid their own reforms less than ten years after enacting them.

lcooper said:

The MSE tax calculator suggests you are way off about NI

Do, do, do, another one bites the dust. You forgot employer's NI. 
60,000 - 9,100 * 0.138 = another £7,042 on top of that.

EthicsGradient

Malthusian said:

MattMattMattUK said:

No, because those would be daft. 

Citation needed. Opal Fruits was a much better name. Starburst sounds like a My Little Pony.

But streamlining the process would make a lot of sense. 

That was what Osborne did when he changed the system. It meant that the majority no longer had any tax to pay on interest, and saved non-taxpayers the bother of reclaiming the 20% tax that had previously been deducted at source.
The general principle is that the less income you have, the less hassle you should have with the taxman. If non-taxpayers have to submit a form as a result of their interest income while richer basic rate taxpayers don't, in order to pay the correct amount of tax, the system has been designed poorly.
Of course, it doesn't work so well when the amount of interest people receive goes up and the interest rate allowance goes down thanks to fiscal drag. But I would be surprised if the Tories undid their own reforms less than ten years after enacting them.

lcooper said:

The MSE tax calculator suggests you are way off about NI

Do, do, do, another one bites the dust. You forgot employer's NI. 
60,000 - 9,100 * 0.138 = another £7,042 on top of that.

Well, if you're going to use your own unique definition of "salary", you could arrive at any figure you feel like. You'd stand a better chance of winning an argument if you stuck to what everyone else means.

jaypers

Malthusian said:

jaypers said:

Income tax on a £60k salary would be £11,432 and NI would be £4,719. I only mention this as that’s nearly £2k, which is significant to many people and your figures are exaggerated. 

A salary of about £60k would incur £12k in income tax (£61.5k, to be precise). And both of you were way off about NI, a salary of £60,000 incurs £11,743 in National Insurance.
For someone paying graduate tax and with two kids, that's £11,432 in income tax, £2,075 child benefit tax, £2,943 graduate tax, £11,743 in NI and £3k council tax. (I'm not counting pension contributions as that's very unlikely to be a tax for someone on £60k.) Total £31,193. What's a rounding error of £2k between friends?
That said, if they have a salary of £60k and they have kids (which usually implies a partner), it's not tax that is stopping them buying a house.

My figures are correct, based on the assumption that the tax code is ‘normal’

RedImp_2

Malthusian said:

MattMattMattUK said:

No, because those would be daft. 

Citation needed. Opal Fruits was a much better name. Starburst sounds like a My Little Pony.

But streamlining the process would make a lot of sense. 

That was what Osborne did when he changed the system. It meant that the majority no longer had any tax to pay on interest, and saved non-taxpayers the bother of reclaiming the 20% tax that had previously been deducted at source.
The general principle is that the less income you have, the less hassle you should have with the taxman. If non-taxpayers have to submit a form as a result of their interest income while richer basic rate taxpayers don't, in order to pay the correct amount of tax, the system has been designed poorly.
Of course, it doesn't work so well when the amount of interest people receive goes up and the interest rate allowance goes down thanks to fiscal drag. But I would be surprised if the Tories undid their own reforms less than ten years after enacting them.

lcooper said:

The MSE tax calculator suggests you are way off about NI

Do, do, do, another one bites the dust. You forgot employer's NI. 
60,000 - 9,100 * 0.138 = another £7,042 on top of that.

Might as well add Corporation tax then

Malthusian

EthicsGradient said:

Well, if you're going to use your own unique definition of "salary", you could arrive at any figure you feel like. You'd stand a better chance of winning an argument if you stuck to what everyone else means.

By "National Insurance" I assume people mean "National Insurance".

RedImp_2 said:
Might as well add Corporation tax then

How so? Employees' salary reduces the Corporation Tax bill. Corporation Tax does constitute an income tax for limited company owners, but Arnoldy's scenario indicates a salaryman.

friolento

It seems I have landed in a strange place where some employer tax payments are somehow deducted by some people from employee gross pay. Whatever floats your boat, I suppose.

Warren_Muppet

I think that the Government should replace the annual personal savings allowance with one based on the individuals annual income tax paid.This would help to mitigate the double taxation of savings made out of already taxed earnings. Individuals who have savings but haven't paid any income tax would lose out, but shouldn't everyone pay some tax for the provision of public services? A similar tax off setting principal could be applied to inheritance tax allowances.

friolento

Warren_Muppet said:

I think that the Government should replace the annual personal savings allowance with one based on the individuals annual income tax paid.This would help to mitigate the double taxation of savings made out of already taxed earnings. Individuals who have savings but haven't paid any income tax would lose out, but shouldn't everyone pay some tax for the provision of public services? A similar tax off setting principal could be applied to inheritance tax allowances.

You don't get taxed on your capital/principal in savings accounts. Only the interest this balance earns counts as taxable income.

ColdIron

Warren_Muppet said:

This would help to mitigate the double taxation of savings made out of already taxed earnings.

There is no double taxation, your earned income is only taxed once

Only the interest arising from the savings is taxed as it is additional income