PAYE - being taxed on £421 worth of savings income - incorrect?

housebuyer143

BoGoF said:

housebuyer143 said:

BoGoF said:

housebuyer143 said:

BoGoF said:

What is your actual tax code - from what you have said it should be 1232L? If so then nobody is saying you will be paying tax because your earnings are less than that.

My tax code is down to 1117 now due tot his and marriage tax allowance. I should not pay tax, but I will be now. 

It would help if you didn't drip feed information.

I didnt know the info that was needed. I explained in my post that I am being taxed on £421 and I wanted to understand why. You have all the info now, but no answer or suggestion?

Update your estimated income on your personal tax account

My estimated income for 24/25 is right but the savings income is still there. I talked to HMRC who cant do anything about taking this off apparently, but seem to think I will be refunded if I overpay. 

sheramber

irrespective of the interest query , do you realise that as you have transerred part of your personal allowqance to your husband you no longer have a personal allowance of 12570.

Instead you have 11310 personal allowances , so on an income of 12000 you will pay tax on 12000 - 11310= 690 @ 20%.

housebuyer143

sheramber said:

irrespective of the interest query , do you realise that as you have transerred part of your personal allowqance to your husband you no longer have a personal allowance of 12570.

Instead you have 11310 personal allowances , so on an income of 12000 you will pay tax on 12000 - 11310= 690 @ 20%.

Yes, but my husband saves more so it's better to transfer it to him, rather than leave £500 unused. 

sheramber

housebuyer143 said:

sheramber said:

irrespective of the interest query , do you realise that as you have transerred part of your personal allowqance to your husband you no longer have a personal allowance of 12570.

Instead you have 11310 personal allowances , so on an income of 12000 you will pay tax on 12000 - 11310= 690 @ 20%.

Yes, but my husband saves more so it's better to transfer it to him, rather than leave £500 unused. 

Yes.
But you were stressing you should not be paying tax.

housebuyer143

sheramber said:

housebuyer143 said:

sheramber said:

irrespective of the interest query , do you realise that as you have transerred part of your personal allowqance to your husband you no longer have a personal allowance of 12570.

Instead you have 11310 personal allowances , so on an income of 12000 you will pay tax on 12000 - 11310= 690 @ 20%.

Yes, but my husband saves more so it's better to transfer it to him, rather than leave £500 unused. 

Yes.
But you were stressing you should not be paying tax.

No, I was stressing that my tax code was reduced for no reason which would equal tax. Taking the allowance back from my husband doesn't do anything to solve this. 

Turns out though it's not a problem, what HMRC do for savings interest is to reduce your personal allowance down to meet your estimated earnings so you can then use the starting rate of tax and personal savings allowance. So the £421 is them reducing it for this reason. If I am estimated to earn more I simply go into the portal, report my new earnings and the deduction for savings interest would be reduced. If I earned over the threshold then the amount they deduct for savings interest would be 0.

Very strange way to do it, but it makes sense to me now.