Best way to avoid paying tax on savings

Notepad_Phil

pookey said:

...
*open a 2 or 3 year bond and get the interest at the end of the term, also a risk as not sure how things go. 
...

You may also find that the provider still reports the interest on an annual basis to yourself and to the HMRC - there have been various recent threads about this on MSE, so if you do go along this route then ensure you are aware of the possible complications.

plantation_2

Use low coupon gilts as an alternative to fixed rate savings - most of the return comes in the form of capital gains, which for gilts are tax free. Several articles on here if you search

friolento

Rheumatoid said:

subjecttocontract said:

No they are not but you still need to declare overseas income to HMRC.

Yes, but you don't usually pay the tax again if there is a double taxation agreement. I think the declaration here is mainly so they can see if you belong in a higher tax band.

Which of our double taxation agreements lets a UK tax resident keep their savings interest outside the jurisdiction of HMRC? I am probably not the only one who would want to pursue this option.

Rheumatoid

friolento said:

Rheumatoid said:

subjecttocontract said:

No they are not but you still need to declare overseas income to HMRC.

Yes, but you don't usually pay the tax again if there is a double taxation agreement. I think the declaration here is mainly so they can see if you belong in a higher tax band.

Which of our double taxation agreements lets a UK tax resident keep their savings interest outside the jurisdiction of HMRC? I am probably not the only one who would want to pursue this option.

I was referring to income generally. Not sure about income from savings / investments.

pookey

Notepad_Phil said:

pookey said:

...
*open a 2 or 3 year bond and get the interest at the end of the term, also a risk as not sure how things go. 
...

You may also find that the provider still reports the interest on an annual basis to yourself and to the HMRC - there have been various recent threads about this on MSE, so if you do go along this route then ensure you are aware of the possible complications.

Thank you, i wasn't aware of this. 

pookey

Thank you for all the replies. I think I'll top up my ISA and perhaps open up a monthly saver or 2 and then pay the tax on whatever is over the 1k limit

wmb194

Rheumatoid said:

friolento said:

Rheumatoid said:

subjecttocontract said:

No they are not but you still need to declare overseas income to HMRC.

Yes, but you don't usually pay the tax again if there is a double taxation agreement. I think the declaration here is mainly so they can see if you belong in a higher tax band.

Which of our double taxation agreements lets a UK tax resident keep their savings interest outside the jurisdiction of HMRC? I am probably not the only one who would want to pursue this option.

I was referring to income generally. Not sure about income from savings / investments.

It makes no difference.

Albermarle

pookey said:

Thank you for all the replies. I think I'll top up my ISA and perhaps open up a monthly saver or 2 and then pay the tax on whatever is over the 1k limit

Just be aware that any tax due in tax year 23/24 ( this one) will be automatically calculated by HMRC around October 2024, and your tax code for 25/26 will be adjusted to collect the extra tax. That is how it usually seems to work anyway.

Middle_of_the_Road

Albermarle said:

pookey said:

Thank you for all the replies. I think I'll top up my ISA and perhaps open up a monthly saver or 2 and then pay the tax on whatever is over the 1k limit

Just be aware that any tax due in tax year 23/24 ( this one) will be automatically calculated by HMRC around October 2024, and your tax code for 25/26 will be adjusted to collect the extra tax. That is how it usually seems to work anyway.

 I understand the point being made, but should this read 24/25?

eskbanker

Middle_of_the_Road said:

Albermarle said:

pookey said:

Thank you for all the replies. I think I'll top up my ISA and perhaps open up a monthly saver or 2 and then pay the tax on whatever is over the 1k limit

Just be aware that any tax due in tax year 23/24 ( this one) will be automatically calculated by HMRC around October 2024, and your tax code for 25/26 will be adjusted to collect the extra tax. That is how it usually seems to work anyway.

 I understand the point being made, but should this read 24/25?

No, the resultant changes to tax codes are applied from the start of the next full tax year, so tax arising from 2023/24 will be calculated during 2024/25 and then collected in 2025/26.