Tax on Savings acct if you already have interest from ISAs

Albermarle

eskbanker said:

Albermarle said:

MisterMotivated said:

You shouldn't have to complete a tax return if the interest is less than £1,000.  The bank should report automatically to HMRC

This is incorrect.
You only have to fill in a self assessment tax return if you earn more than £10,000  in interest.
Otherwise the savings provider will inform HMRC of interest earned, and they will automatically work out if you owe any tax on that interest.

It's not actually incorrect as such - if the interest is less than £1,000 (OP's stated scenario) then there's no need to complete a tax return, but the fact that there's no need to complete one even if the interest is £9,999 doesn't make the posted statement factually incorrect!

OK not incorrect, but potentially able to be misunderstood !

jimjames

MikeJXE said:

I’m retired too with a small private pension and pay tax.

I  don’t have isas yet as my savings interest doesn’t take me over the tax free savings threshold yet

I'd suggest that ISAs are well worth looking at if you have funds that would cause taxable interest if there was no £1000 allowance. ISAs generally are paying more than savings accounts so no disadvantage like there used to be. If the savings allowance was to go then you'd have at least some money protected from tax.

twopenny

Thanks for the advice on ideas. Another ISA isn't my prefered way to go because the money will be spent soon. It's a flexible amount - for holiday (haven't  had one for 7yrs, heating, car because mine has conked out so it's hung around what with the pandemic and all but is now in demand.

Time to do the lottery  

I'm caught because I tied up one ISA and the interest which I'd hoped to use, doesn't get paid till next June

MikeJXE

jimjames said:

MikeJXE said:

I’m retired too with a small private pension and pay tax.

I  don’t have isas yet as my savings interest doesn’t take me over the tax free savings threshold yet

I'd suggest that ISAs are well worth looking at if you have funds that would cause taxable interest if there was no £1000 allowance. ISAs generally are paying more than savings accounts so no disadvantage like there used to be. If the savings allowance was to go then you'd have at least some money protected from tax.

I already have that in mind as from next April I will exceed my limit for 25/26 if things stay as they are

I have a savings fix ending next month that will feed my first ISA

My other fixes end next June ish thats when I will do the calculations

MisterMotivated

Albermarle said:

MisterMotivated said:

You shouldn't have to complete a tax return if the interest is less than £1,000.  The bank should report automatically to HMRC

This is incorrect.

This is incorrect. 
What I posted is correct, regardless of what happens in other circumstances, i.e. if the interest is over £1,000.  I only mentioned £1,000 because the OP did, and I left it at that to keep things simple and avoid having to go into detail about processes for £1,000+ interest (or £500+ for higher rate taxpayers).  If you're going to nitpick, I suggest you ensure your own post is beyond reproach

Bigwheels1111

Take your pensions away from £18,570, whatever is left is the amount of interest you can earn tax free as such.
Pensions of £14,300 leaves £4,270 of tax free interest.

Vortigern

twopenny said:

Happy days when it (tax) was done at source

But then you'd have had to fill in a form to claim back the tax paid on your interest.

friolento

twopenny said:

Thanks for the advice on ideas. Another ISA isn't my prefered way to go because the money will be spent soon. 

That doesn't appear to be a reason at all against having an easy access cash ISA.

After all, an easy access cash ISA is just another easy access savings account, with the advantage of 100% tax free interest (on current legislation.....)

MikeJXE

I took my own advice and opened my first easy access cash ISA

Trading 212, 5.2% interest paid daily

Perhaps you should look at that OP 

twopenny

Lol I've never been in a position to reclaim tax - I had it all worked out in my youth.

I'm also trying to keep it simple as life is like being in a tumble dryier at the moment.

But yes, I'm paying £108pa tax at the moment and from what I gather the bank informs the tax office and any extra will be added to that.

Unfortunately I doubt the money will be there long short of a mystery legacy turning up.

But it's also looking at the future.

The instant access ISA is an option. I opened a new isa last tax year and will want to transfer it to something more substantial than this so another to open next tax year.

So this year is free to do another.

But I've just read that you can open as many as you like in a tax year! I thought it was only one? That was last year but this year is different - could you clarify please?