New tax code - Interest on savings?

zagfles

clareski said:

zagfles said:

The HMRC PAYE system hasn't been properly updated to cope with the PSA, even though we've had it about 6 years. If it expects you not to use up your personal allowance it deducts interest it expects you to earn from your tax code even though this is totally pointless.

If you don't use up your personal allowance it'll make no difference, but if you do, you'll be overtaxed. How much do you expect to earn?

My wages this year will be between £12,000 and £13,000.  I have some money in fixed term savings for 1, 2 and 3 years.  Does the interest on the 3 years count per annum or for the whole amount in year three at term for interest purposes?

That's a can of worms. See this thread https://forums.moneysavingexpert.com/discussion/6431490/tax-on-savings-account-interest/p1 (ignore the initial irrelavent diversion about the Halifax reward account)

xylophone

The HMRC PAYE system hasn't been properly updated to cope with the PSA, even though we've had it about 6 years. If it expects you not to use up your personal allowance it deducts interest it expects you to earn from your tax code even though this is totally pointless. If you don't use up your personal allowance it'll make no difference, but if you do, you'll be overtaxed. How much do you expect to earn?

See

https://forums.moneysavingexpert.com/discussion/comment/79585658/#Comment_79585658

Albermarle

clareski said:

zagfles said:

The HMRC PAYE system hasn't been properly updated to cope with the PSA, even though we've had it about 6 years. If it expects you not to use up your personal allowance it deducts interest it expects you to earn from your tax code even though this is totally pointless.

If you don't use up your personal allowance it'll make no difference, but if you do, you'll be overtaxed. How much do you expect to earn?

My wages this year will be between £12,000 and £13,000.  I have some money in fixed term savings for 1, 2 and 3 years.  Does the interest on the 3 years count per annum or for the whole amount in year three at term for interest purposes?

As already said it is a grey area. The MSE official advice is disputed by some, as explained also here. 
Savings Accounts: deterred from compounding? — MoneySavingExpert Forum

Sunshine_and_Roses

Albermarle said:

clareski said:

zagfles said:

The HMRC PAYE system hasn't been properly updated to cope with the PSA, even though we've had it about 6 years. If it expects you not to use up your personal allowance it deducts interest it expects you to earn from your tax code even though this is totally pointless.

If you don't use up your personal allowance it'll make no difference, but if you do, you'll be overtaxed. How much do you expect to earn?

My wages this year will be between £12,000 and £13,000.  I have some money in fixed term savings for 1, 2 and 3 years.  Does the interest on the 3 years count per annum or for the whole amount in year three at term for interest purposes?

As already said it is a grey area. The MSE official advice is disputed by some, as explained also here. 
Savings Accounts: deterred from compounding? — MoneySavingExpert Forum

I didn't realise it would be so complicated.  I thought that the ladder system would work for me, though I am still hopeful as I should be under the tax free amount.  

Dazed_and_C0nfused

clareski said:

zagfles said:

The HMRC PAYE system hasn't been properly updated to cope with the PSA, even though we've had it about 6 years. If it expects you not to use up your personal allowance it deducts interest it expects you to earn from your tax code even though this is totally pointless.

If you don't use up your personal allowance it'll make no difference, but if you do, you'll be overtaxed. How much do you expect to earn?

My wages this year will be between £12,000 and £13,000.  I have some money in fixed term savings for 1, 2 and 3 years.  Does the interest on the 3 years count per annum or for the whole amount in year three at term for interest purposes?

If you think your pay could be as much as £13,000 then just update your estimated earnings in your Personal Tax Account and that will prompt a tax code review.

With estimated earnings of £13,000 you won't have any spare Personal Allowance so with interest all covered by the savings starter rate band there will be no tax code deduction and your code will be 1265L

Personal Allowance 12,570 + Expenses 80 = tax code allowances of 12,650 = tax code 1265L.