Extra 2% on savings ?

DRS1

OK so does someone want to explain to me why the additional rate on dividends remains unchanged while the additional rate on savings interest goes up by 2%?  Basic rate and higher rate for dividends is going up by 2% so it is nothing special about dividends.

intalex

DRS1 said:

OK so does someone want to explain to me why the additional rate on dividends remains unchanged while the additional rate on savings interest goes up by 2%?  Basic rate and higher rate for dividends is going up by 2% so it is nothing special about dividends.

The broadest shoulders will run away...

friolento

To save people having to roam through the entire budget document

FIREDreamer

friolento said:

To save people having to roam through the entire budget document

You can see how that fits in with an increase in income tax by 2%. They shelved that, but kept this.

dcs34

DRS1 said:

OK so does someone want to explain to me why the additional rate on dividends remains unchanged while the additional rate on savings interest goes up by 2%?  Basic rate and higher rate for dividends is going up by 2% so it is nothing special about dividends.

For the same reason the £20k limit on S&S ISAs isn't changing; MPs and HMT officials quite like them!

LISAs? Student loans? Salary sacrifice pensions? Different story!

Albermarle

subjecttocontract said:

It's not going to make much difference. Someone receiving £10,000 in taxable savings interest will only be paying another £200. Nothing to loose sleep about.

Plus not very many people will be earning £10K in savings interest per year. In fact it seems not too many people actually pay any tax at all on savings. From the budget >>

 2.37 The majority of taxpayers and the majority of pensioners have no taxable savings, dividend or property income and will pay no more tax as a result of these changes.109 In particular, over 90% of taxpayers do not pay savings tax.110 In 2029-30, around two thirds of the revenue from the increases to the property, dividend, and savings tax rates is expected to come from the top 20% of households. 2.38 Those with small amounts of income from assets will continue to be protected by tax-free allowances, and all taxpayers will continue to benefit from the protection offered by Individual Savings Accounts (ISAs). Interest and dividends received on assets held within ISAs will continue to be entirely tax-free

ranciduk

I find this all very confusing 

if someone could answer my simple query I would therefore be grateful 😇 

I earn interest on various savings accounts but as I have zero - absolutely nothing - income from other sources I don’t pay any tax on my interest earned currently

so will this remain the same?

(the interest is less than 10k per year)


 Cheers

jak22

It's not about those who don't pay tax on savings interest, its about those who do. From posts here there's many who do and put effort into maximising the interest which they live off, such as fixes to shield against upcoming interest rate drops. This is a 10% increase on tax paid - on savings on which tax has already been paid once.

eskbanker

ranciduk said:

I find this all very confusing 

if someone could answer my simple query I would therefore be grateful 😇 

I earn interest on various savings accounts but as I have zero - absolutely nothing - income from other sources I don’t pay any tax on my interest earned currently

so will this remain the same?

(the interest is less than 10k per year)


 Cheers

Yes, no change in your scenario, today's announcement only relates to interest income that's subject to taxation after all allowances have been used up.

SnowMan

ranciduk said:

I find this all very confusing 

if someone could answer my simple query I would therefore be grateful 😇 

I earn interest on various savings accounts but as I have zero - absolutely nothing - income from other sources I don’t pay any tax on my interest earned currently

so will this remain the same?

(the interest is less than 10k per year)


 Cheers

The interest will still fall within your personal allowance so you will have no tax to pay.

Even if your gross interest was £18,570 you would have no tax to pay, as the first £12,570 of savings interest would come under the personal allowance and 5K of the rest would come under the starter savings band so be taxed at 0% and the remaining £1,000 would be covered by the savings allowance so taxed at 0% also.