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  • FIRST POST
    • MSE Helen Saxon
    • By MSE Helen Saxon 2nd Apr 15, 4:26 PM
    • 75Posts
    • 44Thanks
    MSE Helen Saxon
    Tax Free Savings Guide
    • #1
    • 2nd Apr 15, 4:26 PM
    Tax Free Savings Guide 2nd Apr 15 at 4:26 PM
    Hi!

    This is the discussion thread for the



    Click reply below to discuss. If you haven’t already, join the forum to reply. If you aren’t sure how it all works, read our New to Forum? Intro Guide.


    Thanks folks,


    MSE Helen
Page 3
    • colsten
    • By colsten 3rd Feb 16, 8:26 PM
    • 10,443 Posts
    • 9,638 Thanks
    colsten
    Each to their own: Magpie - collecting all the bank accounts available or Squirrel - Tesco Internet Saver 1.01 Gross - including a fixed 0.26% bonus for 12 months [/B]
    Originally posted by frank777
    It would of course be very stupid to keep your money in a 1.01% gross account. I was talking about 5% accounts, and there are 3%, 4%, and 6% ones, too, as discussed at great length on this forum over many months and sometimes even years.
    • frank777
    • By frank777 3rd Feb 16, 9:17 PM
    • 294 Posts
    • 136 Thanks
    frank777
    Tesco Savings account - they are used for Direct Debits by the Magpies, as discussed at great length on this forum over many months and sometimes even years
    Last edited by frank777; 03-02-2016 at 9:20 PM.
    • murphydavid
    • By murphydavid 4th Feb 16, 10:22 AM
    • 620 Posts
    • 143 Thanks
    murphydavid
    Thought I would mention that for 2015 HMT always say if your taxable income is less than 15,600 when they could say if your gross income is less than £26,100 (this being your salary normally quoted by your employer). So you might think my salary is well over 15,600 not realizing salary of £26,100 makes your savings tax free.
    Also; as its getting near the end of the tax year; if you complete an R85 now not all banks will make it retrospective especially matured accounts. ie if you had an account mature and thus close or transfer last month with taxed interest it will be hard to get the tax back with an R85. So I would wait till the end of the tax year and use an R40 thus save work by doing it all on one form.
    Also its getting closer so its worth putting this back in the limelight.
    5/2/16
    Sorry I got this wrong - in the document I read they used the words "taxable income" but the actual budget show's that in most cases the £15,600 is actually gross income. also see top savings accounts discussion.
    Last edited by murphydavid; 05-02-2016 at 9:59 AM. Reason: Got it wrong
    • frank777
    • By frank777 4th Feb 16, 1:37 PM
    • 294 Posts
    • 136 Thanks
    frank777
    Its getting closer to the new tax year, so its worth putting this back in the limelight
    Calling MSE Helen Saxon - any comment on the £2,000 personal savings allowance 2016/17
    • MikeFloutier
    • By MikeFloutier 4th Feb 16, 7:53 PM
    • 214 Posts
    • 75 Thanks
    MikeFloutier
    Quick question on the post-April16 situation:

    Where my wife and I have a joint savings account, is the interest treated as being shared between us (for tax-free savings allowance purposes)? Or can we apportion it ourselves when completing our tax returns?
    • colsten
    • By colsten 4th Feb 16, 10:03 PM
    • 10,443 Posts
    • 9,638 Thanks
    colsten
    Its getting closer to the new tax year, so its worth putting this back in the limelight
    Calling MSE Helen Saxon - any comment on the £2,000 personal savings allowance 2016/17
    Originally posted by frank777
    Check the government information as it is the government that determines your taxes.
    • colsten
    • By colsten 4th Feb 16, 10:05 PM
    • 10,443 Posts
    • 9,638 Thanks
    colsten
    Quick question on the post-April16 situation:

    Where my wife and I have a joint savings account, is the interest treated as being shared between us (for tax-free savings allowance purposes)? Or can we apportion it ourselves when completing our tax returns?
    Originally posted by MikeFloutier
    There is no change on how joint accounts are being handled. The interest gets halfed, and each party gets tax based on their total income and allowances.
    • frank777
    • By frank777 4th Feb 16, 10:43 PM
    • 294 Posts
    • 136 Thanks
    frank777
    ''abridged extract'' - colsten
    HM Treasury
    ''from April 2015, you won’t have to pay tax on your interest if your taxable income is less than £15,600''

    ''from April 2016, you won’t have to pay tax on your interest if your taxable income is less than £16,800''

    In simple terms an extra £1,200 = £2,200 personal savings allowance 2016/17 (E&OE)
    • BodMor
    • By BodMor 10th Feb 16, 10:07 AM
    • 19 Posts
    • 5 Thanks
    BodMor
    Income tax if you only earn interest?
    So in principle if your only source of income was interest you could earn
    a) £10,600 before paying any tax (ie the starting rate band and PSA do not stack with personal allowance)
    b) £15600 (= personal allowance plus savings starting rate band of £5000) or
    c) £16,600 (= personal allowance plus savings starting rate band plus £1000 personal savings allowance)?
    • BodMor
    • By BodMor 10th Feb 16, 11:39 AM
    • 19 Posts
    • 5 Thanks
    BodMor
    Part answer to own question
    Personal income tax allowance and starting rate of income tax for savings do stack:

    "Example 2 – I expect all of my income to be from savings
    If your total savings income for 2015-16 (other than from tax-advantaged accounts such as ISAs) will be below £15,500, you will not be liable to pay tax on any of your savings income.

    If your total savings income for 2015-16 (other than from tax-advantaged accounts such as ISAs) will be more than £15,500, you will not be liable to pay tax on £15,500 of this savings income. Your income from tax-advantaged accounts such as ISAs will remain tax-free. "


    Google: 8073_The_starting_rate_of_tax_on_savings_Budget_20 14_Final_v1.0.pdf
    • frank777
    • By frank777 12th Feb 16, 3:23 PM
    • 294 Posts
    • 136 Thanks
    frank777
    HM Revenue & Customs
    HM Treasury

    https://www.gov.uk/government/publications/personal-savings-allowance-factsheet/personal-savings-allowance
    Personal Savings Allowance: latest information
    Updated 8 February 2016
    ''abridged extract'' - colsten
    In really simple terms
    ''If your total taxable income is less than £17,000 you won’t pay tax on any savings income'' (E&OE)
    • stphnstevey
    • By stphnstevey 30th Mar 16, 11:47 AM
    • 3,007 Posts
    • 496 Thanks
    stphnstevey
    What about if your salary and interest are below £17k, but dividends takes you up to the basic rate band? do you still get the £5k +£1k tax free allowance ?
    • BazzaG
    • By BazzaG 5th Apr 16, 9:30 AM
    • 1 Posts
    • 0 Thanks
    BazzaG
    Interest on 65+ Guaranteed Growth Bonds
    How does the new interest-on-savings tax regs affect the 65+ Pensioner Bonds? Although I am a non-tax payer due to my income being below the threshold, I am still taxed on the interest on my bond and have to claim a refund from HMRC!
    • Archi Bald
    • By Archi Bald 5th Apr 16, 9:55 AM
    • 9,376 Posts
    • 7,432 Thanks
    Archi Bald
    Any interest we add to your Bond on or after 6 April 2016 will be added without any tax being taken off.
    This is from http://www.nsandi.com/files/published_files/asset/pdf/65-guaranteed-growth-bonds-maturity-leaflet.pdf

    You'll only have to reclaim up to today.
    • wollidoodl
    • By wollidoodl 1st Mar 18, 9:45 AM
    • 1 Posts
    • 0 Thanks
    wollidoodl
    Refund of tax on saving interest up to £5000
    The article indicates that this is possible from the tax year starting April 5th 2015. Does any one know if claims can be made for tax years prior to this ?
    • eskbanker
    • By eskbanker 1st Mar 18, 10:01 AM
    • 10,424 Posts
    • 12,696 Thanks
    eskbanker
    The article indicates that this is possible from the tax year starting April 5th 2015. Does any one know if claims can be made for tax years prior to this ?
    Originally posted by wollidoodl
    My understanding is that no, the April 2015 changes weren't retrospective and only applied to the 2015/16 tax year onwards.
    • jonon
    • By jonon 27th Jul 18, 10:02 AM
    • 19 Posts
    • 0 Thanks
    jonon
    How does savings interest tax work with NI payments and student loan repayments? I'm self employed.


    Does the tax free allowance only relate to your personal allowance?



    Thanks
    • Dazed and confused
    • By Dazed and confused 27th Jul 18, 10:12 AM
    • 4,939 Posts
    • 2,574 Thanks
    Dazed and confused
    There are no real "allowances" for taxable savings interest other than the Personal Allowance.

    Depending on your individual circumstances you may be eligible to have £5,000 of interest taxed at the savings starter rate (currently 0%) or the Personal Savings Allowance rate which is also currently 0%.

    Ultimately though it is taxable income so for example if you had business profits of £25,000 and savings interest of £1200 your tax position in the current tax year would look like this (assuming you aren't Scottish resident for tax purposes)

    Profits £25,000
    Interest £1,200
    £26,200 less Personal Allowance £11,850 = £14350

    £13150 taxed at 20%
    £1000 taxed at 0%
    £200 taxed at 20%

    Bottom line is you still have £26,200 of taxable income and £14,350 gets taxed, albeit some at a 0% rate.
    • jonon
    • By jonon 27th Jul 18, 10:33 AM
    • 19 Posts
    • 0 Thanks
    jonon
    Thanks Dazed and Confused. So regarding National insurance and student loan repayments, savings interest are just seen as profits? and the £1000 allowance for basic rate tax payers has nothing to do with these?


    So you could still get 9% NI tax and 9% student loan repayments on savings interest above £0? (once over your NI allowance, repayment threshold etc?
    Last edited by jonon; 27-07-2018 at 10:40 AM.
    • Dazed and confused
    • By Dazed and confused 27th Jul 18, 10:42 AM
    • 4,939 Posts
    • 2,574 Thanks
    Dazed and confused
    There is no £1000 "allowance" for savings.

    In the example I gave the line in red is commonly known as the Personal Savings Allowance but in reality is a 0% tax rate. I don't know the income rules for Student Loans or even if interest is counted in the first place but the point I was making is that, in the example I gave, your taxable income would be £26,200, not £25,200.

    You don't have to pay National Insurance on taxable interest so this can be ignored for Class 4 (and Class 2) National Insurance purposes.

    £13150 taxed at 20%
    £1000 taxed at 0%
    £200 taxed at 20%
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