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Saving Tax rate 10%

I have heard now there is a 10% tax rate on savings for people with low earners.

So, with the personal allowance starting at £5435, so between £5435 and £7755, saving income is taxed at 10%. As long as your non saving income is belows £5435.

Say if I earnt £6000 through worked income, would any saving income on top of this now be taxed at 20%?

Thanks
«1

Comments

  • CLAPTON
    CLAPTON Posts: 41,865 Forumite
    10,000 Posts Combo Breaker
    in your example, you would be taxed at 10% on the first 1755 of interest (i.e. 7755 - 6000) and on 20% on the rest... you would have to claim this for the HMRC of course.
    The actual allowances are, of course changing in september
  • neil324
    neil324 Posts: 460 Forumite
    CLAPTON wrote: »
    in your example, you would be taxed at 10% on the first 1755 of interest (i.e. 7755 - 6000) and on 20% on the rest... you would have to claim this for the HMRC of course.
    The actual allowances are, of course changing in september

    So the allowances for 2008/9 is 6,035pounds is it just in place for these years or following years also
  • CLAPTON
    CLAPTON Posts: 41,865 Forumite
    10,000 Posts Combo Breaker
    5435 is replaced by 6035 as the tax free allowance.. the 2320 at 10% for interest doesn't change... these will however apply for the whole of this tax year.

    the new rates will stay until the chancellor changes them; almost certainly they will change for the new tax year i.e. from 6th april 2009
  • neil324
    neil324 Posts: 460 Forumite
    CLAPTON wrote: »
    5435 is replaced by 6005 as the tax free allowance.. the 2320 at 10% for interest doesn't change... these will however apply for the whole of this tax year.

    the new rates will stay until the chancellor changes them; almost certainly they will change for the new tax year i.e. from 6th april 2009

    Thanks is the 2320 at 10% a new thing, ive never heard of that before. Lets say you earn more than 2320 in interest, the way i read the inland website is you lose the the 10% on the first 2320 and pay 20% across the board
  • CLAPTON
    CLAPTON Posts: 41,865 Forumite
    10,000 Posts Combo Breaker
    just to clarify
    6035 is the tax free allownace for 2008-9

    2320 at 10% only applies to interest whereas previously the allowance applied to all income (i.e. both earnings and interest and was 2230 for 2007-8)
  • neil324
    neil324 Posts: 460 Forumite
    CLAPTON wrote: »
    just to clarify
    6035 is the tax free allownace for 2008-9

    2320 at 10% only applies to interest whereas previously the allowance applied to all income (i.e. both earnings and interest and was 2230 for 2007-8)

    But my reading of http://www.hmrc.gov.uk/rates/it.htm bottom of page. If your interest is more than 2320 then the 10% does not apply and it gets taxed @ 20%
  • nottingham13
    nottingham13 Posts: 128 Forumite
    Part of the Furniture 10 Posts Combo Breaker
    It say on the website

    There will be a new 10% starting rate for savings income only, with a limit of £2320. If an individual’s taxable non-savings income is above this limit then the 10% savings rate will not be applicable.

    I think this makes it clear. So, your savings income up to the £2320 allowance will be taxed at 10% (provided you have no other income(for easy sake)), but any interest passed this £2320 your savings will be taxed at 20%.
  • CLAPTON
    CLAPTON Posts: 41,865 Forumite
    10,000 Posts Combo Breaker
    as I read it, it says that if the individual's NON-SAVING INCOME is above 2320 then the 10% is not applicable...
  • Mikeyorks
    Mikeyorks Posts: 10,377 Forumite
    Part of the Furniture 10,000 Posts Combo Breaker
    neil324 wrote: »
    But my reading of http://www.hmrc.gov.uk/rates/it.htm bottom of page. If your interest is more than 2320 then the 10% does not apply and it gets taxed @ 20%

    Sorry ... your reading is incorrect. If any of your savings interest (the top slice of your income) hits the band formed by your (personal allowances + £2320) ...... then the interest is not taxable up to the limit of your PA and is taxable at 10% from PA to PA + £2320.

    And that applies whether your PA is the basic £5435 or the higher rate of £9180. The information Clapton has posted earlier is quite correct.
    If you want to test the depth of the water .........don't use both feet !
  • Mikeyorks
    Mikeyorks Posts: 10,377 Forumite
    Part of the Furniture 10,000 Posts Combo Breaker
    (provided you have no other income(for easy sake).

    If your only income is interest - then all your interest up to the limit of your Personal Allowance ..... is tax free. And then charged at 10% for interest falling in the zone (Personal Allowance + £2320).

    Where your non-savings income exceeds your Personal Allowance + £2320 .... then the 10% band does not exist, for you.
    If you want to test the depth of the water .........don't use both feet !
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