Paying tax on interest from savings.

alm721

Just wondered if anyone knows if I need to pay tax on interest earnt on savings? I am currently on an extended leave of absence from work following maternity leave. My maternity pay has currently run out and I am recieving no pay at all and will not recieve any until next September. Do I still have to pay tax on interest earnt on savings during this period? I have earnt over the annual allowance for this tax year so suspect the answer may be yes but just thought I'd ask as Im currently not gettin paid anything and weve recently remortaged and borrowed extra money as we intend to move and wanted the extra cash. Therefore it could make quite a difference to as as we have £60k sitting in an account which we are paying mortgage interest on. I did try inland revenue but the lady I talked to wasn't sure? She just said it was best to wait till the end of the tax year? Any advice gratefully recieved.Thanks

Aegis

If you've paid over the lower threshold in any one year, you will need to pay tax on your interest.

jem16

If you have already earned more than £5225 from 6th April 2007, then yes you have to pay tax on the interest.

CLAPTON

if your total income (earning and gross interest) is less than 5225 then you need pay no tax on either your earnings or the interest

if your total income is less that 5225 plus 2230 (7455) the you only need pay 10% on the amount over 5225.

Even if your income is over this amount but you are no longer receiving any income its possible you are owed a tax rebate as normal PAYE means you will have paid too much.

Dont really understand why you remortgaged but I guess that's not relevant here. The fact you are paying interest on your mortgage makes no difference to your tax liability on your income I'm afraid.

Mikeyorks

alm721 wrote: »

we have £60k sitting in an account

Previous responses apply. But that sounds to be a joint account you have your savings in? In which case the exemption you were querying would, in any event, only have applied to your 50% of the interest.

alm721

Thanks, thought that would be the case but just wanted to check. We remortgaged as we wanted to borrow more money for when we move but knew that we'd have problems borrowing it after I went on extended maternity as my hubby is self employed and has recently changed from a partnership to sole trader (his dad retired) so he tachnically has less than 1 years trading accounts, and I'm not earning at present . Many thanks