Saving Tax rate 10%

jennifernil

I am now totally confused!

I will have about £45 pw State Pension soon , plus about £4000 pa savings income. How will I be taxed?

johnllew

jennifernil wrote: »

I am now totally confused!

I will have about £45 pw State Pension soon , plus about £4000 pa savings income. How will I be taxed?

Depends how old you are. How old are you?

jem16

jennifernil wrote: »

I am now totally confused!

I will have about £45 pw State Pension soon , plus about £4000 pa savings income. How will I be taxed?

You had that question answered in April - at the moment it still applies although you seem to have lost some savings income.

http://forums.moneysavingexpert.com/showpost.html?p=9992241&postcount=6

From September PA goes up to £6035. (as you say you are 60)

So your income of £6340

First £6035 tax free
Next £305 at 10% = £30.50

So tax due will be £30.50 for year 08/09.

nottingham13

So to clarify,

I am not a pensioner, my income is £7000, and I earn £200 from savings.

Currently the personal allowance is £5435.

So, I will be taxed at 20%, between £5435 and £7000, and then 10% on the £200 savings.

Is this correct?

CLAPTON

assuming you actually mean your income is 7,200 of which 7,000 is non savings income and 200 is gross income from savings then yes.

nottingham13

Yeah, sorry, £7000 non saving income and £200 saving income

Mikeyorks

nottingham13 wrote: »

Is this correct?

Spot on. The tax changes (the abolition of the 10% tax band + the reduction from 22% to 20% + the new 10% Savings band {where applicable}) ..... were badged as 'simplification'!

As you can now see .... it's neither simpler for customers nor for HMRC.

Milarky

I'd quite like to write to the Treasury about this topic and ask (tongue in cheek) "WHY did Gordon Brown, as Chancellor, since he abolished the 10% rate band on earned income stating that i) this was in order to simplify the tax system - to one with just two rates and ii) because he has since confirmed that the 10% was always 'transitional', NOT also abolish the 10% rate on top-sliced non-earned income?"

(I wonder how they would field that? If I was them I could only attempt a series of non sequiturs: "The government has always strongly believed in providing incentives towards saving.... That is why [off topic] we introduced ISAs which have proved very popular.... The 10% rate on savings to which you refer will only apply to a small number of individuals in any case... Mr Brown has a sense of humour [no, I wouldn't expect them to use that last one]

jennifernil

jem16 wrote: »

You had that question answered in April - at the moment it still applies although you seem to have lost some savings income.

http://forums.moneysavingexpert.com/showpost.html?p=9992241&postcount=6

From September PA goes up to £6035. (as you say you are 60)

So your income of £6340

First £6035 tax free
Next £305 at 10% = £30.50

So tax due will be £30.50 for year 08/09.

Thank you for the recalculation! Yes, I'm afraid we spent some of our savings on a new caravan, plus some unexpected repairs to the house.

jem16

jennifernil wrote: »

Thank you for the recalculation! Yes, I'm afraid we spent some of our savings on a new caravan, plus some unexpected repairs to the house.

Ah you have been skiing.