Over 60 housewife with 80 K savings, once I earn over 1K interest, is t

pw23

I have 80 K in an easy access savings account and I understand I can earn £1000 interest per tax year, tax free, but once I go over this level I understand I will need to start paying income tax 

As I have always been a unemployed housewife, I am unsure about what my requirements would be once I earn over 1K


Am I right in thinking I would then need to declare myself self-employed and fill out the PAYE documents/returns


As if this is the case, I don't want to be burdened with all of this as it overwhelms me

I already have some in a cash ISA so wouldn't be able to move much there

Bravepants

It depends on your other income, there's a very similar thread here:

https://forums.moneysavingexpert.com/discussion/6447766/personal-tax-allowance-savings

Dazed_and_C0nfused

pw23 said:

I have 80 K in an easy access savings account and I understand I can earn £1000 interest per tax year, tax free, but once I go over this level I understand I will need to start paying income tax 

As I have always been a unemployed housewife, I am unsure about what my requirements would be once I earn over 1K


Am I right in thinking I would then need to declare myself self-employed and fill out the PAYE documents/returns


As if this is the case, I don't want to be burdened with all of this as it overwhelms me

I already have some in a cash ISA so wouldn't be able to move much there

I think you've misunderstood somewhere along the line.

Interest from ISA's is tax free, other savings interest is taxable although the amount of tax payable will depend on your total taxable income and what the income is derived from, pension, earnings etc.

Not sure where self employment comes into this (do you have a business?) but if you have absolutely no other taxable income then you can earn a minimum of £17,310 before any tax is payable on the interest.

And if you haven't applied for Marriage Allowance it would be £18,570.

The likelihood is the £1,000 savings nil rate band (aka Personal Savings Allowance) is of no relevance to you as you have to use your Personal Allowance first.  Then any savings starter rate band (up to £5,000 interest taxed at 0%) and only then can you use the savings nil rate band (up to £1,000 taxed at 0%).

Perhaps you could clarify what other taxable income you have?  The State Pension is taxable.

eskbanker

pw23 said:

Am I right in thinking I would then need to declare myself self-employed...

You certainly don't need to declare yourself to be self-employed unless you actually are self-employed!

pw23 said:

...and fill out the PAYE documents/returns

PAYE is Pay As You Earn, i.e. the arrangements relating to automated collection of tax from employment or pension income, so that doesn't seem to be applicable here either.

If you're perhaps thinking that you may need to complete a tax return then this is unlikely, as you'd typically need to be earning over £10K in interest to trigger this (there are other reasons to self-assess but nothing you've shared so far suggests anything applicable).

Dazed_and_C0nfused

And we do appear to have been here before!

https://forums.moneysavingexpert.com/discussion/6439557/over-60-and-dont-work-how-much-tax-do-i-have-to-pay-on-a-savings-account

dunstonh

As I have always been a unemployed housewife, I am unsure about what my requirements would be once I earn over 1K

Unemployed means signing on and claiming benefits.  Are you doing that?

Am I right in thinking I would then need to declare myself self-employed and fill out the PAYE documents/returns

Not unless you are going self employed.  And the self employed dont get paid PAYE.  PAYE applies to employees.

I already have some in a cash ISA so wouldn't be able to move much there

20k per tax year for the ISA and £2880 for pension.   So, you should be able to move £28,880 per tax year to more tax efficient options.

Plus, if you are not working and are under state pension age, then you can earn a lot more interest than £1000 without paying tax.

As if this is the case, I don't want to be burdened with all of this as it overwhelms me

There is no burden telling HMRC.   You dont need to do anything other than inform them.  That can be online or it can be a simple written memo to them giving them the amounts.   You don't need to set yourself up as something you are not.

However, it seems likely that you are not going to be a taxpayer on the savings but a bit more info on your situation would help in that respect.

allegro120

pw23 said:

I have 80 K in an easy access savings account and I understand I can earn £1000 interest per tax year, tax free, but once I go over this level I understand I will need to start paying income tax 

As I have always been a unemployed housewife, I am unsure about what my requirements would be once I earn over 1K


Am I right in thinking I would then need to declare myself self-employed and fill out the PAYE documents/returns


As if this is the case, I don't want to be burdened with all of this as it overwhelms me

I already have some in a cash ISA so wouldn't be able to move much there

80k in an easy access will generate interest at around 3k.  In your circumstances you are allowed to earn up to 6k in interest without paying tax on it, so you don't need to declare  or fill out anything.

molerat

allegro120 said:

pw23 said:

I have 80 K in an easy access savings account and I understand I can earn £1000 interest per tax year, tax free, but once I go over this level I understand I will need to start paying income tax 

As I have always been a unemployed housewife, I am unsure about what my requirements would be once I earn over 1K


Am I right in thinking I would then need to declare myself self-employed and fill out the PAYE documents/returns


As if this is the case, I don't want to be burdened with all of this as it overwhelms me

I already have some in a cash ISA so wouldn't be able to move much there

80k in an easy access will generate interest at around 3k.  In your circumstances you are allowed to earn up to 6k in interest without paying tax on it, so you don't need to declare  or fill out anything.

How do you come to that conclusion ?  As correctly stated above they may be able to earn up to £18570 in interest without paying tax but nothing they have stated gives more credence to either figure.

allegro120

molerat said:

allegro120 said:

pw23 said:

I have 80 K in an easy access savings account and I understand I can earn £1000 interest per tax year, tax free, but once I go over this level I understand I will need to start paying income tax 

As I have always been a unemployed housewife, I am unsure about what my requirements would be once I earn over 1K


Am I right in thinking I would then need to declare myself self-employed and fill out the PAYE documents/returns


As if this is the case, I don't want to be burdened with all of this as it overwhelms me

I already have some in a cash ISA so wouldn't be able to move much there

80k in an easy access will generate interest at around 3k.  In your circumstances you are allowed to earn up to 6k in interest without paying tax on it, so you don't need to declare  or fill out anything.

How do you come to that conclusion ?  As correctly stated above they may be able to earn up to £18570 in interest without paying tax but nothing they have stated gives more credence to either figure.

1. £80k in an easy access account (whatever account it might be) is not likely to generate much more than £3k a year.
2. OP stated that she is not working, so I assumed there is no other personal income.
3. £5k(starting rate)+£1k(personal savings allowance)=£6k tax free allowance for savings so she doesn't need "to be burdened with all of this".

eskbanker

allegro120 said:

molerat said:

allegro120 said:

pw23 said:

I have 80 K in an easy access savings account and I understand I can earn £1000 interest per tax year, tax free, but once I go over this level I understand I will need to start paying income tax 

As I have always been a unemployed housewife, I am unsure about what my requirements would be once I earn over 1K


Am I right in thinking I would then need to declare myself self-employed and fill out the PAYE documents/returns


As if this is the case, I don't want to be burdened with all of this as it overwhelms me

I already have some in a cash ISA so wouldn't be able to move much there

80k in an easy access will generate interest at around 3k.  In your circumstances you are allowed to earn up to 6k in interest without paying tax on it, so you don't need to declare  or fill out anything.

How do you come to that conclusion ?  As correctly stated above they may be able to earn up to £18570 in interest without paying tax but nothing they have stated gives more credence to either figure.

1. £80k in an easy access account (whatever account it might be) is not likely to generate much more than £3k a year.
2. OP stated that she is not working, so I assumed there is no other personal income.
3. £5k(starting rate)+£1k(personal savings allowance)=£6k tax free allowance for savings so she doesn't need "to be burdened with all of this".

But you're missing the point that OP is also likely to have her entire £12,570 personal tax allowance, which can be used by savings interest income, and indeed must be used by it before either of the nil-rate bands comes into play, so the £18,570 figure is likely to be the correct answer....

pw23

Dazed_and_C0nfused said:

And we do appear to have been here before!

https://forums.moneysavingexpert.com/discussion/6439557/over-60-and-dont-work-how-much-tax-do-i-have-to-pay-on-a-savings-account

Oh dear, looks like my age is showing