Will I be taxed?

angelinamay

Hello all,  following the sale of the marital home and a small property I purchased after leaving husband in 2013, I've managed to purchase a Bungalow with the proceeds.  It needs work doing to it, and I have £34000 in a savings account to finance this.  My normal every day acount has £7000 in it. I'm  retired, with a modest pension.  Question is:  Will I get taxed (currently don't pay tax) on my money please?  I also had a CG bill of £4,400 that's been paid.  Thanks all,

Mark_d

No you don't get taxed on money you already have.  You only get taxed on money you receive eg. dividends, interest, wages, capital gains.

angelinamay

Mark_d said:

No you don't get taxed on money you already have.  You only get taxed on money you receive eg. dividends, interest, wages, capital gains.

Thank you Mark - I was considering withdrawing the lot and hiding  it under the matress...

grumpy_codger

If you mean tax on the savings interest, then see MSE article:
How the starting rate for savings rate [works]: tax free savings if you earn under £18,570

Also, you don't say anything about what sort of 'savings account' you have. Interest on savings in cash ISAs is tax-free regardless of your income.

>> Top cash ISAs 2024/25

InvesterJones

There is no tax to pay on money in an account, only (potentially) on the interest you earn from it.

eskbanker

angelinamay said:

Hello all,  following the sale of the marital home and a small property I purchased after leaving husband in 2013, I've managed to purchase a Bungalow with the proceeds.  It needs work doing to it, and I have £34000 in a savings account to finance this.  My normal every day acount has £7000 in it. I'm  retired, with a modest pension.  Question is:  Will I get taxed (currently don't pay tax) on my money please?  I also had a CG bill of £4,400 that's been paid.  Thanks all,

There may be a tax liability if you earned enough interest in total over the whole tax year, i.e. that on the proceeds from the two property sales prior to the bungalow purchase, plus whatever you earn on the residual amounts above, but you'd need to tot up how much that is/was and add it to your pension income to identify total taxable income.  As above, there are a couple of allowances that may mitigate some or even all of any such liability though....

Exodi

angelinamay said:

Mark_d said:

No you don't get taxed on money you already have.  You only get taxed on money you receive eg. dividends, interest, wages, capital gains.

Thank you Mark - I was considering withdrawing the lot and hiding  it under the matress...

But to be clear (and as he said), any interest generated would be taxable, unless it was held in an ISA or is within the starting/personal savings allowances.

If you were receiving an annual taxable income above £17,570 (but below £50,270), the first £1,000 in savings interest would not be taxable, but any interest above this would be.

As an example, £41k in a non-ISA savings account earning 4.5% is generating £1845 in interest per year, meaning £845 would be liable to tax.

Pretty easy to remedy by using your annual ISA allowance (£20k) - you could even use an easy access Cash ISA.

(You may have already considered all the above, in which case, disregard).

angelinamay

grumpy_codger said:

If you mean tax on the savings interest, then see MSE article:
How the starting rate for savings rate [works]: tax free savings if you earn under £18,570

Also, you don't say anything about what sort of 'savings account' you have. Interest on savings in cash ISAs is tax-free regardless of your income.

>> Top cash ISAs 2024/25

Nationwide, the every day account is a flex account, the other is just a savings account - I manage bot online.

angelinamay

eskbanker said:

angelinamay said:

Hello all,  following the sale of the marital home and a small property I purchased after leaving husband in 2013, I've managed to purchase a Bungalow with the proceeds.  It needs work doing to it, and I have £34000 in a savings account to finance this.  My normal every day acount has £7000 in it. I'm  retired, with a modest pension.  Question is:  Will I get taxed (currently don't pay tax) on my money please?  I also had a CG bill of £4,400 that's been paid.  Thanks all,

There may be a tax liability if you earned enough interest in total over the whole tax year, i.e. that on the proceeds from the two property sales prior to the bungalow purchase, plus whatever you earn on the residual amounts above, but you'd need to tot up how much that is/was and add it to your pension income to identify total taxable income.  As above, there are a couple of allowances that may mitigate some or even all of any such liability though....

I only received the extra (£34k) following the sale of the mariral home end of September, so it's only been in my account since then.  If I've calculated it correctly, I should only get interest for approx 6 months (at end of tax year), which works out about £630.  But I could be wrong !

angelinamay

Exodi said:

angelinamay said:

Mark_d said:

No you don't get taxed on money you already have.  You only get taxed on money you receive eg. dividends, interest, wages, capital gains.

Thank you Mark - I was considering withdrawing the lot and hiding  it under the matress...

But to be clear (and as he said), any interest generated would be taxable, unless it was held in an ISA or is within the starting/personal savings allowances.

If you were receiving an annual taxable income above £17,570 (but below £50,270), the first £1,000 in savings interest would not be taxable, but any interest above this would be.

As an example, £41k in a non-ISA savings account earning 4.5% is generating £1845 in interest per year, meaning £845 would be liable to tax.

Pretty easy to remedy by using your annual ISA allowance (£20k) - you could even use an easy access Cash ISA.

(You may have already considered all the above, in which case, disregard).

My annual income in total is less than £12k - reduced state pension (contribution deficient) 

Bigwheels1111

angelinamay said:

Exodi said:

angelinamay said:

Mark_d said:

No you don't get taxed on money you already have.  You only get taxed on money you receive eg. dividends, interest, wages, capital gains.

Thank you Mark - I was considering withdrawing the lot and hiding  it under the matress...

But to be clear (and as he said), any interest generated would be taxable, unless it was held in an ISA or is within the starting/personal savings allowances.

If you were receiving an annual taxable income above £17,570 (but below £50,270), the first £1,000 in savings interest would not be taxable, but any interest above this would be.

As an example, £41k in a non-ISA savings account earning 4.5% is generating £1845 in interest per year, meaning £845 would be liable to tax.

Pretty easy to remedy by using your annual ISA allowance (£20k) - you could even use an easy access Cash ISA.

(You may have already considered all the above, in which case, disregard).

My annual income in total is less than £12k - reduced state pension (contribution deficient) 

That is easy to work out.

The first £18,570 is tax free.

£12,570 is tax free, this can be made up of Earnings, Pensions or interest.

£  5,000 Starter savings rate. ( Interest )

£  1,000 Personal saving rate..

So £18,570 - £12,000 pension leaves £6570 of tax free interest before you would pay tax on it.