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  • FIRST POST
    • superlative
    • By superlative 11th Oct 18, 12:26 PM
    • 31Posts
    • 18Thanks
    superlative
    Personal Savings Allowance on bank interest, tax return question
    • #1
    • 11th Oct 18, 12:26 PM
    Personal Savings Allowance on bank interest, tax return question 11th Oct 18 at 12:26 PM
    The new Personal Savings Allowance means I shouldn't have to pay any tax on interest under 1k, right? The general advice out there seems to be that you still need declare it on your tax return, but that you won't be taxed on it.

    However I've just done this, added my approx 250 of interest under untaxed interest. The calculation shows it's being treated as taxable income, and I am paying tax on it.

    If I delete the bank interest section, my tax bill goes down.

    I can't see anywhere on the form to somehow opt in the PSA

    What I am supposed to do?


    FYI I pay only basic rate, and need to do tax return for PAYE, self employment and property.


    TIA
Page 1
    • Pennywise
    • By Pennywise 11th Oct 18, 1:17 PM
    • 10,652 Posts
    • 19,991 Thanks
    Pennywise
    • #2
    • 11th Oct 18, 1:17 PM
    • #2
    • 11th Oct 18, 1:17 PM
    Have you declared it in the UK bank interest section? There are other sections for other types of interest which won't be zero rated by the PSA, so I suspect you've entered it in the wrong section.
    • superlative
    • By superlative 11th Oct 18, 1:38 PM
    • 31 Posts
    • 18 Thanks
    superlative
    • #3
    • 11th Oct 18, 1:38 PM
    • #3
    • 11th Oct 18, 1:38 PM
    Yes I've put it in the right place. It's showing in the calculation as Interest from UK banks.

    I've figured out what's going on. The tax has been calculated correctly and I'm not being taxed on the bank interest.

    The difference is because additional income, even though not taxed, has increased my Student Loan repayments. So when I complete the interest section of the tax return, my total due increases slightly because of that.

    What confused me is the interest is included under 'Total Income on which tax has been charged'. However when you look at the numbers, it's been 'taxed' at 0%.

    Good to know I guess - interest is still income for student loan purposes, the PSA doesn't change that.

    Glad I figured it out anyway.
    Last edited by superlative; 11-10-2018 at 1:45 PM.
    • superlative
    • By superlative 11th Oct 18, 1:48 PM
    • 31 Posts
    • 18 Thanks
    superlative
    • #4
    • 11th Oct 18, 1:48 PM
    • #4
    • 11th Oct 18, 1:48 PM
    ... which of course would be one of the reasons we are still asked to declare it.
    • Dazed and confused
    • By Dazed and confused 11th Oct 18, 9:00 PM
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    Dazed and confused
    • #5
    • 11th Oct 18, 9:00 PM
    • #5
    • 11th Oct 18, 9:00 PM
    There are several other situations where this supposed "tax-free" income actually increases the amount you have to pay even though the income itself is taxed at 0%.

    Reduction of Personal Allowance (where income is over 100k), High Income Child Benefit Charge and Married Couple's Allowance can all be impacted in a similar way.

    And dividends taxed under the "Dividend Allowance" nil rate band have the same impact as well.
    • superlative
    • By superlative 12th Oct 18, 6:58 PM
    • 31 Posts
    • 18 Thanks
    superlative
    • #6
    • 12th Oct 18, 6:58 PM
    • #6
    • 12th Oct 18, 6:58 PM
    Thanks Dazed, useful to know. I did wonder why HMRC are still insisting we declare interest when below the PSA amount. If the interest tips you over a certain threshold, (eg the Student Loan repayment threshold), the 'penalty' could be quite high. In my case it's only a few quid.

    I suppose anyone who isn't asked to fill in a tax return, would just fall under the radar on this issue.
    Last edited by superlative; 12-10-2018 at 7:01 PM. Reason: clarification
    • Dazed and confused
    • By Dazed and confused 12th Oct 18, 7:44 PM
    • 3,019 Posts
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    Dazed and confused
    • #7
    • 12th Oct 18, 7:44 PM
    • #7
    • 12th Oct 18, 7:44 PM
    No, are required to send the interest details to HMRC each year so most people should be taxed correctly.
    • glider3560
    • By glider3560 12th Oct 18, 8:24 PM
    • 3,679 Posts
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    glider3560
    • #8
    • 12th Oct 18, 8:24 PM
    • #8
    • 12th Oct 18, 8:24 PM
    As an opposite way of doing things, the new 1000 "trading allowance" doesn't have to be declared, nor does it count as income for any other purpose.

    • superlative
    • By superlative 12th Oct 18, 10:35 PM
    • 31 Posts
    • 18 Thanks
    superlative
    • #9
    • 12th Oct 18, 10:35 PM
    • #9
    • 12th Oct 18, 10:35 PM
    Hang on, I've just read this on the MSE student loan thread here:


    For the self-employed/ those with other income: If you are self-employed, you are responsible for notifying HMRC of payments when you do your self-assessment form.
    If you have additional income of 2,000+ from savings interest, pensions or shares and dividends, this will also be treated as part of your income for repayment purposes and you'll need to repay 9% of that, again via self-assessment.

    2000? That implies anything under that shouldn't be counted. But my 250 is.

    Any insight, anyone?
    • superlative
    • By superlative 12th Oct 18, 10:52 PM
    • 31 Posts
    • 18 Thanks
    superlative
    I keep answering my own questions. Apparently property income is also counted towards the 2k.
    • superlative
    • By superlative 12th Oct 18, 11:17 PM
    • 31 Posts
    • 18 Thanks
    superlative
    As an opposite way of doing things, the new 1000 "trading allowance" doesn't have to be declared, nor does it count as income for any other purpose.
    Originally posted by glider3560

    I have too much self employed income and related expenses, for the trading allowance to be useful to me, this year at least. But yeah, if applicable, it'd be helpful on this issue too.
    • polymaff
    • By polymaff 15th Oct 18, 5:35 PM
    • 2,290 Posts
    • 1,000 Thanks
    polymaff
    Yeah - providing it is not the wrong sort of sub-1,000 trading income. How many filling in self-assessment will read the direct implication that less than 1,000 means you don't need to report it and leave it at that?

    In terms of tax-payer and "expert" misunderstandings this could be the new Marriage Allowance Transfer
    Last edited by polymaff; 15-10-2018 at 5:39 PM. Reason: missing ?
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