Tax on Savings

sabelu

This year my interest on my savings will be c£3k and my wife a little less. We are both retired and our individual income is below £12570 I have read that we get an extra £5k tax free savings allowance as our individual incomes from occupational pensions is below £17.5k.
Do we have to claim for this etc or will no tax be requested from us?

eskbanker

No claim needed, the institutions concerned will report the interest to HMRC, who will see that no tax is due and that no further action is necessary....

sabelu

Is this very well communicated as all my friends think they get taxed everything over 1k this year and 500 next?

ColdIron

sabelu said:

Is this very well communicated as all my friends think they get taxed everything over 1k this year and 500 next?

MSE has an article about it. Most people in employment can't use it

https://www.moneysavingexpert.com/savings/tax-free-savings

NB The Personal Savings Allowance is not dropping to £500 next year

eskbanker

sabelu said:

Is this very well communicated as all my friends think they get taxed everything over 1k this year and 500 next?

It's always going to be subjective about how well communicated such things are, but you obviously found the gov.uk page and there's one in MSE-speak on this site too:

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

Your friends are presumably either mistaken or their aggregate income is over £18,570?

sabelu

ColdIron said:

sabelu said:

Is this very well communicated as all my friends think they get taxed everything over 1k this year and 500 next?

MSE has an article about it. Most people in employment can't use it

https://www.moneysavingexpert.com/savings/tax-free-savings

NB The Personal Savings Allowance is not dropping to £500 next year

So there is no benefit for these savers to open isa’s?

sabelu

eskbanker said:

sabelu said:

Is this very well communicated as all my friends think they get taxed everything over 1k this year and 500 next?

It's always going to be subjective about how well communicated such things are, but you obviously found the gov.uk page and there's one in MSE-speak on this site too:

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

Your friends are presumably either mistaken or their aggregate income is over £18,570?

I understand what you’re saying here and thank you but I didn’t pick up on this in Martin’s programme last night but I’m grateful to all that have answered my queries…..

ColdIron

sabelu said:

ColdIron said:

sabelu said:

Is this very well communicated as all my friends think they get taxed everything over 1k this year and 500 next?

MSE has an article about it. Most people in employment can't use it

https://www.moneysavingexpert.com/savings/tax-free-savings

NB The Personal Savings Allowance is not dropping to £500 next year

So there is no benefit for these savers to open isa’s?

Which savers? If your interest is covered by one or all of the 3 'allowances' (like you) then probably not. If not then they are very much to savers benefit

eskbanker

sabelu said:

eskbanker said:

sabelu said:

Is this very well communicated as all my friends think they get taxed everything over 1k this year and 500 next?

It's always going to be subjective about how well communicated such things are, but you obviously found the gov.uk page and there's one in MSE-speak on this site too:

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

Your friends are presumably either mistaken or their aggregate income is over £18,570?

I understand what you’re saying here and thank you but I didn’t pick up on this in Martin’s programme last night but I’m grateful to all that have answered my queries…..

Any time I've caught bits of the TV show, it jumps out at me just how superficial it is - his whole schtick is obviously to try to simplify everything for a mass audience but in doing so for a TV show, any sense of nuance and detail is lost as he gabbles through a wide range of subjects at breakneck speed!  IMHO he really ought to use it as an opportunity to signpost interested punters to places where they can be more fully informed, such as this site, rather than trying to give the impression that he's covered subjects in sufficient detail.

Anyway, returning to the £1K versus £500, the former applies to basic rate taxpayers and the latter to higher rate ones, and neither is changing from this year to next, or it could perhaps have been that the subject for that was the dividend allowance, which does change from £1K in 23/24 to £500 in 24/25?

Albermarle

sabelu said:

Is this very well communicated as all my friends think they get taxed everything over 1k this year and 500 next?

The general level of ignorance/misunderstanding about all personal finance issues is a big problem.
That is why people make decisions that cost them lots of money, pay too much tax, or even worse lose money to scammers.
Martin tries to inform, but as the previous  post said a rapid fire TV programme is not an ideal way to deal with issues that are not that simple.

Dazed_and_C0nfused

Albermarle said:

sabelu said:

Is this very well communicated as all my friends think they get taxed everything over 1k this year and 500 next?

The general level of ignorance/misunderstanding about all personal finance issues is a big problem.
That is why people make decisions that cost them lots of money, pay too much tax, or even worse lose money to scammers.
Martin tries to inform, but as the previous  post said a rapid fire TV programme is not an ideal way to deal with issues that are not that simple.

Couldn't agree more.