P55 and savings interest

baz8755

Hi,

I need a little advice regarding filling in P55 with regards to interest.

Each year I take the maximum amount permissible below tax £12,570.00(+25% allowance) via UFPLS and this is my only income with the exception of savings interest.

I normally earn less than £1k in savings interest although I believe I could earn £3k tax free interest due to my low income.

I declare the pension income and the savings income and they are deducting the savings income from my tax code, which is results in it being lower than 1257L.

Am I doing this wrong, should I be putting £0 in the earned interest section of P55 or should I be declaring my £1k interest.

Also how do I get the interest paid back.

Thanks

DRS1

With the income figures you describe you could get £6k of savings interest taxed at 0% not £3k.

No idea about P55s but generally it is not a good idea to tell HMRC your income is 0 when it isn't.

I have seen others on here say that the thing to do is to make sure your pension income is correctly estimated in your personal tax account. The idea being that HMRC will use up "redundant" personal allowance in a tax code calculation with an interest figure but if you have no "redundant" personal allowance (because the pension uses it all up) then the interest figure gets left out of the calculation. I am not sure if that is relevant here as I imagine you would have given them the right figure for your pension income.

DRS1

Oh if you really want to say your interest income is 0 then perhaps get all your money into an ISA: that way you won't be generating taxable interest.

molerat

Make sure your estimated income from that pension is showing correctly as £12570 in your on line tax account - the tax code should then be set at 1257L.

Take your UFPLS withdrawals either in March for the full amount or twice (or more) in the year with a final one in March so the tax taken is correct over the year.