Savings Tax

Dont_Listen_to_Me

RobertWBattye said:

In the weekly newsletter it is stated that a person could have £20,600 in the top paying 2 year fix at 4.85% before paying tax (ie produces £999 interest PER YEAR) 
But if there is no access to the interest before maturity interest received is:- Year1 Nil, Year 2 £1998 with tax payable on the amount above £1000.
HMRC document states "Interest ‘arises’ when it is received or made available to the recipient. Interest has been made available if it is credited to an account on which the account holder is free to draw"

Also (not quite your point but may be relevant to your planning on Savings Interest), the weekly email is slightly wrong in that the "Starting Rate for Savings" of £5,000 hasn't been taken account of in that number of £20,600
One can earn £12,570 wages/pension etc and £5,000 interest without paying tax as pointed out by nxdmsandkaskdjaqd


On the savings element that means the amount you can have in the bank without paying interest is (£5,000/4.85%) £103,000
as long as your earnings are less than £12,570 

cricidmuslibale

blueste said:

My wife pays the higher rate of Income tax, I pay zero income tax as my earnings are non-taxable and I do not receive a pension. All of the savings accounts are in my sole name, do I (we) receive the full £12,570 + £5000 + £1000 in tax free savings?

You will receive the amount that is [£12,570 - your non taxable earnings that are not savings], whatever that comes to + £5000 in savings interest taxed at 0% + £1000 in savings interest taxed at 0%, as I understand it. Both the savings starter rate and the personal savings allowance are taxable at 0% rather than tax free as up to £20,000 placed in an ISA per year would be.

Thumbs_Up

Dazed_and_C0nfused said:

nxdmsandkaskdjaqd said:

So you can earn £12,570 + £5000 + £1000, before paying any tax, right?

In interest yes, if you have absolutely no other taxable income whatsoever.

Thanks to the interest rates rising I will cross that £10k annual interest barrier perhaps not this financial year2021/2022 but certainly will 2022/2023. How do I play my cards with HMRC.

At the start of the new financial year 2023 do I drop them a email and hint I will be over £10k for the current year, or do I wait until 2023/2024 and they will contact me suggesting I need to pay them tax.    

N.B. I have no other income other then dividend payments wrap up in a ISA.

butterflymum

Thumbs_Up said:

Dazed_and_C0nfused said:

nxdmsandkaskdjaqd said:

So you can earn £12,570 + £5000 + £1000, before paying any tax, right?

In interest yes, if you have absolutely no other taxable income whatsoever.

Thanks to the interest rates rising I will cross that £10k annual interest barrier perhaps not this financial year2021/2022 but certainly will 2022/2023. How do I play my cards with HMRC.

At the start of the new financial year 2023 do I drop them a email and hint I will be over £10k for the current year, or do I wait until 2023/2024 and they will contact me suggesting I need to pay them tax.    

N.B. I have no other income other then dividend payments wrap up in a ISA.

 https://www.gov.uk/apply-tax-free-interest-on-savings

says:

"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."

soulsaver

butterflymum said:

Thumbs_Up said:

Dazed_and_C0nfused said:

nxdmsandkaskdjaqd said:

So you can earn £12,570 + £5000 + £1000, before paying any tax, right?

In interest yes, if you have absolutely no other taxable income whatsoever.

Thanks to the interest rates rising I will cross that £10k annual interest barrier perhaps not this financial year2021/2022 but certainly will 2022/2023. How do I play my cards with HMRC.

At the start of the new financial year 2023 do I drop them a email and hint I will be over £10k for the current year, or do I wait until 2023/2024 and they will contact me suggesting I need to pay them tax.    

N.B. I have no other income other then dividend payments wrap up in a ISA.

 https://www.gov.uk/apply-tax-free-interest-on-savings

says:

"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."

Hope this isn't hijacking but seems vaguely related:

What action is HMRC likely to/can they take if you don't do an SA and have earned £10k + in savings interest?

Will they write and tell you to do one? 

Are they 'interested' in what other income you have as well as the savings interest?

What do you think is the rationale that says you can earn £9999 in interest in a tax year without SA, but you have to do a SA if you earn £2 more?

I'm going to guess they're going to be pretty busy this next few tax years, and they may want to raise the threshold.

Dazed_and_C0nfused

soulsaver said:

butterflymum said:

Thumbs_Up said:

Dazed_and_C0nfused said:

nxdmsandkaskdjaqd said:

So you can earn £12,570 + £5000 + £1000, before paying any tax, right?

In interest yes, if you have absolutely no other taxable income whatsoever.

Thanks to the interest rates rising I will cross that £10k annual interest barrier perhaps not this financial year2021/2022 but certainly will 2022/2023. How do I play my cards with HMRC.

At the start of the new financial year 2023 do I drop them a email and hint I will be over £10k for the current year, or do I wait until 2023/2024 and they will contact me suggesting I need to pay them tax.    

N.B. I have no other income other then dividend payments wrap up in a ISA.

 https://www.gov.uk/apply-tax-free-interest-on-savings

says:

"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."

Hope this isn't hijacking but seems vaguely related:

What action is HMRC likely to/can they take if you don't do an SA and have earned £10k + in savings interest?

Will they write and tell you to do one? 

Are they 'interested' in what other income you have as well as the savings interest?

What do you think is the rationale that says you can earn £9999 in interest in a tax year without SA, but you have to do a SA if you earn £2 more?

I'm going to guess they're going to be pretty busy this next few tax years, and they may want to raise the threshold.

Once they receive details of the interest from the banks/building societies they may well send a notice to file a return.

And they are interested in all taxable income, you include all taxable income on a Self Assessment return, not just interest.

If the threshold is raised I doubt it would be much given the Personal Allowance is only £11,310 for some people.

Bigwheels1111

soulsaver said:

butterflymum said:

Thumbs_Up said:

Dazed_and_C0nfused said:

nxdmsandkaskdjaqd said:

So you can earn £12,570 + £5000 + £1000, before paying any tax, right?

In interest yes, if you have absolutely no other taxable income whatsoever.

Thanks to the interest rates rising I will cross that £10k annual interest barrier perhaps not this financial year2021/2022 but certainly will 2022/2023. How do I play my cards with HMRC.

At the start of the new financial year 2023 do I drop them a email and hint I will be over £10k for the current year, or do I wait until 2023/2024 and they will contact me suggesting I need to pay them tax.    

N.B. I have no other income other then dividend payments wrap up in a ISA.

 https://www.gov.uk/apply-tax-free-interest-on-savings

says:

"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."

Hope this isn't hijacking but seems vaguely related:

What action is HMRC likely to/can they take if you don't do an SA and have earned £10k + in savings interest?

Will they write and tell you to do one? 

Are they 'interested' in what other income you have as well as the savings interest?

What do you think is the rationale that says you can earn £9999 in interest in a tax year without SA, but you have to do a SA if you earn £2 more?

I'm going to guess they're going to be pretty busy this next few tax years, and they may want to raise the threshold.

They will send you a letter and ask you to fill out a self assessment form online.

I know as called them yesterday to ask the same question.

As when I fix my savings in the next 3 months at 5% plus i will go over 10K for interest.

As a low earner I can get 15K interest before paying tax.