10%/20%?

albula

This new year tax year 2008/9 income tax starts at 20%. It does not apply to 2007/8 in which one still can have the first £2000 odd income taxed at 10%. This is what it states on the Customs and Inland Revenue website.
How is it that Nationwide is already charging 20% on savings from last year to the current new tax year instead of the 10% it has been charging in the past. Can anyone answer this? Thanks

Baldur

See http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/TaxOnSavingsAndInvestments/DG_4015739, the paragraphs headed "Tax deducted from interest before you receive it" and "Reclaiming or paying extra tax on savings interest".

merlinthehappypig

I've been having to sort out my parents in law's finances and noticed that their Abbey passbook account was having tax deducted at 10% from the interest as well - most recently last September.

Any idea why this might be? My understanding is that it should be deducted at 20%, unless you register for gross interest.

albula

Can't find the thanks link, but thank you Baldur, shall have something back from the bank......

Aegis

albula wrote: »

This new year tax year 2008/9 income tax starts at 20%. It does not apply to 2007/8 in which one still can have the first £2000 odd income taxed at 10%. This is what it states on the Customs and Inland Revenue website.
How is it that Nationwide is already charging 20% on savings from last year to the current new tax year instead of the 10% it has been charging in the past. Can anyone answer this? Thanks

Tax has been deducted at source at 20% for years. If you're a basic rate taxpayer (i.e. earning more than £5225 last year) then you're all square. If you were a non-taxpayer, then you can reclaim the tax paid. If you were a starting rate taxpayer, you could claim back 10%.

It's all about the total level of your income though, not just your savings income.

nicko33

Aegis wrote: »

It's all about the total level of your income though, not just your savings income.

I think I read that in 08-09 the 10% band still exists, but only if all your income is from savings interest.

edit:
I thought I saw it on HMRC website but it is here already
http://forums.moneysavingexpert.com/showthread.html?t=648071

Aegis

nicko33 wrote: »

I think I read that in 08-09 the 10% band still exists, but only if all your income is from savings interest.

edit:
I thought I saw it on HMRC website but it is here already
http://forums.moneysavingexpert.com/showthread.html?t=648071

Yeah, this year it's started being more difficult to understand!