Tax on savings

Pingu1

If the interest earned was £1148, then I should be paying £229 in tax, or should it be 20% of £148?

Dazed_and_C0nfused

Pingu1 said:

I work full time. My tax code was £1257L. Where does the £251 come from? I thought I would get £1000 tax free savings allowance. Is this the same allowance if I was to rent a room out, or do I get a different allowance for that? Really confused.

The £251 is likely to be unused Personal Allowance (12319 + 251 = 12570).

You really need to check your Personal Tax Account to see HMRC have as your estimated earnings.

It could simply be amazing coincidence that the deduction needed is £251 but I think that is unlikely from what you have previously posted.

Unless HMRC have estimated your interest as £1,251 for some reason??

For the year 23/24, I earned £1148 in interest

Pingu1

I'm not sure if I am a higher rate tax payer as my salary is £42K per annum. I thought the threshold was £50K, but elsewhere read its £37K

eskbanker

Pingu1 said:

I'm not sure if I am a higher rate tax payer as my salary is £42K per annum. I thought the threshold was £50K, but elsewhere read its £37K

It's £37,700 for the band above your personal tax allowance of £12,570, i.e. you can earn £50,270 in total before paying higher rate tax (unless in Scotland, no marriage allowances in play, etc), so total taxable income of £42K will be taxed at basic rate.

Pingu1

Thank you.

Pingu1

I can't get through to the tax office. Ive logged in online and its even worse than i thought. I owe £1273 in tax. So it looks like I am not getting the £1000 personal savings allowance, and am being taxed at 40%.

Dazed_and_C0nfused

Pingu1 said:

I can't get through to the tax office. Ive logged in online and its even worse than i thought. I owe £1273 in tax. So it looks like I am not getting the £1000 personal savings allowance, and am being taxed at 40%.

Are you sure you have understood the £1273 figure?

Is that a tax code deduction?  If so it is more likely you owe £255.

But instead of drip feeding tiny bits of information why not explain the whole picture then people can help you.

Pingu1

For the tax year 23/24, total amount of savings interest was £1148. Total earned through my employer was £42415.32. My tax code is changing from 1257L to 1231X. There is less untaxed interest of £251 which I don't understand. Total amount of tax owed is £43 (in the letter) or £52 (according to government gateway). Its not clear which tax year the letter is refering to.

For the tax year £24/25, I earned £1979 in interest. I earned £46746.96 from my employer. Government gateway says there is £251 untaxed interest on my savings, and my tax code will drop to 1184L. There is an underpayment of £477.

I still can't get through to the tax office. I think what has happened is they have taken away my personal savings allowance. I've also been renting out my driveway, this year earning £198. I've stopped doing it as I no longer have control over who parks in my parking space.

poolboy

If you are just hitting the 50k threshold you lose the 500 gbp savings allowance, if you can afford it you may like to put a bit in a sipp to get you sub 50k.  Then any higher rate exposure can be claimed back.  Watch the sipp admin fees though, you may be shooting yourself in the foot.

Pingu1

I don't believe I have hit the 50K threashold yet, but will do so next tax year or the one after.