Tax Misery for State Pensioners

EdInvestor

Mikeyorks wrote: »

That isn't correct. You only get 10% on any Savings interest that hits the band formed by 'personal allowances + £2320'. (the limit of the new 10% band)

So if you have £5435 personal allowances and income / pension of £7755 or more ..... then the 10% band does not exist for you.

Sorry, not sure what you mean.Let's say someone has savings interest of 2320, pension income of 7000, and a personal allowance of 5435, do they get the 10p band on the savings interest or not?

seven-day-weekend

I think your husband probably needs to fill in a form from the bank/BS so that no tax is deducted at all and then pay the 10% via his tax return.

But, err, shouldn't you be on the Spanish tax system, not the British? [/e

His Teachers Pension has to have tax deducted in the UK as it is a Government pension and he/I do not have enough other income to pay tax in Spain. We are below the threshold for submitting Spanish tax returns.

We are registered with the Spanish Hacienda (tax office).

EdInvestor

seven-day-weekend wrote: »

We are registered with the Spanish Hacienda (tax office).

I guess if you have a proper UK tax office than it will be easy to claim the 10% back on the short form, rather than fill in a whole SA .

johnllew

EdInvestor wrote: »

Sorry, not sure what you mean.Let's say someone has savings interest of 2320, pension income of 7000, and a personal allowance of 5435, do they get the 10p band on the savings interest or not?

As I understand it, they will get some of the 10p band.

Pension: £7000
Per Allce: 5435
Net:........1565

£2320 - 1565 = £755

So £1565 of the pension will be taxed at 20% basic rate, £755 of the savings income will be taxed at 10% and the balance of the savings at 20%.

Savings income will always be treated as the top slice of income for these purposes and if earned income is more than £7755 (5435 + 2320), the 10% savings band is lost.

krisskross

seven-day-weekend wrote: »

I think your husband probably needs to fill in a form from the bank/BS so that no tax is deducted at all and then pay the 10% via his tax return.

But, err, shouldn't you be on the Spanish tax system, not the British? [/e

His Teachers Pension has to have tax deducted in the UK as it is a Government pension and he/I do not have enough other income to pay tax in Spain. We are below the threshold for submitting Spanish tax returns.

We are registered with the Spanish Hacienda (tax office).

If it had been possible to pay tax on all your income in Spain then there would probably be nothing to pay as the Spanish tax free allowances are much more generous than the British ones. Most people I knew elected to have their tax affairs dealt with by the Spanish authorities and were better off as a result. However as you say this is not possible with a government pension.

Mikeyorks

EdInvestor wrote: »

Sorry, not sure what you mean.Let's say someone has savings interest of 2320, pension income of 7000, and a personal allowance of 5435, do they get the 10p band on the savings interest or not?

They get a part of it .... post #95 has it spot on, so I won't repeat it. Part of the overall rationale for these tax changes was alleged to be 'tax simplification'.

As is clearly evident ...... this change is neither simpler for the customer nor for HMRC?

Mikeyorks

EdInvestor wrote: »

it will be easy to claim the 10% back on the short form, rather than fill in a whole SA .

If I've read the inference in the previous posts correctly ..... there should be no involvement with SA? You either claim the excess back on an R40 or letter + P60 + Certificate of tax deducted ..... that keeps it entirely within PAYE. HMRC may also issue a P810 periodically (every 3 years they claim) just to keep a check on the entity of income from Interest.

millie

My Cahoot bank account interest is being taxed at 20%, so is the interest in a savings account I have with them. is there something I am supposed to do to change it to !0% or have they got it wrong.

Mikeyorks

millie wrote: »

My Cahoot bank account interest is being taxed at 20%, so is the interest in a savings account I have with them. is there something I am supposed to do to change it to !0% or have they got it wrong.

If you're a taxpayer - they have it right. Cahoot can either pay it gross (if you can legitimately sign an R85) ..... or they deduct 20%. No other choice.

At the end of the year .... if your total income doesn't exceed your personal allowances + £2320 ..... you may be entitled to claim some of the tax on your interest at 10% (see post #95)

margaretclare

Have you seen this?

http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2008/04/23/ntax223.xml