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  • FIRST POST
    • 6pac
    • By 6pac 9th Sep 19, 3:30 PM
    • 10Posts
    • 8Thanks
    6pac
    No longer a tax payer
    • #1
    • 9th Sep 19, 3:30 PM
    No longer a tax payer 9th Sep 19 at 3:30 PM
    I recently took voluntary redundancy and Iíve decided to live off my savings. (I have no income and donít receive any benefits) I was wondering how being a none tax payer would effect the interest I get on my savings?
    From what Iíve read a 20% tax payer can earn £1000 per year without paying tax but I canít find any info for the rules if I earn nothing at all. Am I missing something obvious?
Page 1
    • BoGoF
    • By BoGoF 9th Sep 19, 3:42 PM
    • 5,309 Posts
    • 5,172 Thanks
    BoGoF
    • #2
    • 9th Sep 19, 3:42 PM
    • #2
    • 9th Sep 19, 3:42 PM
    Unless you are receiving more than your tax free allowance of £12,500 you don't need to worry about any tax rates.
    • 6pac
    • By 6pac 9th Sep 19, 4:18 PM
    • 10 Posts
    • 8 Thanks
    6pac
    • #3
    • 9th Sep 19, 4:18 PM
    • #3
    • 9th Sep 19, 4:18 PM
    Thanks. So I could receive £12000 in interest on my savings and not pay any tax at all?
    • BoGoF
    • By BoGoF 9th Sep 19, 4:36 PM
    • 5,309 Posts
    • 5,172 Thanks
    BoGoF
    • #4
    • 9th Sep 19, 4:36 PM
    • #4
    • 9th Sep 19, 4:36 PM
    Thanks. So I could receive £12000 in interest on my savings and not pay any tax at all?
    Originally posted by 6pac
    Correct, and I would be envious of your capital if you did.
    • 6pac
    • By 6pac 9th Sep 19, 4:39 PM
    • 10 Posts
    • 8 Thanks
    6pac
    • #5
    • 9th Sep 19, 4:39 PM
    • #5
    • 9th Sep 19, 4:39 PM
    Having money saved in an isa is no longer worth while then?
    • BoGoF
    • By BoGoF 9th Sep 19, 4:47 PM
    • 5,309 Posts
    • 5,172 Thanks
    BoGoF
    • #6
    • 9th Sep 19, 4:47 PM
    • #6
    • 9th Sep 19, 4:47 PM
    Given the low ISA rates.....no. Only of use to higher rate taxpayers.
    • 6pac
    • By 6pac 9th Sep 19, 4:50 PM
    • 10 Posts
    • 8 Thanks
    6pac
    • #7
    • 9th Sep 19, 4:50 PM
    • #7
    • 9th Sep 19, 4:50 PM
    Brilliant, thank you very much BoGoF I appreciate your thoughts.
    • ANDY597
    • By ANDY597 9th Sep 19, 4:59 PM
    • 391 Posts
    • 283 Thanks
    ANDY597
    • #8
    • 9th Sep 19, 4:59 PM
    • #8
    • 9th Sep 19, 4:59 PM
    Maybe a stupid question but if you live off savings how do you make sure your state pension national insurance contributions are up to date?

    Do you have to make voluntary contributions?

    Sorry to hijack thread,

    • 6pac
    • By 6pac 9th Sep 19, 5:33 PM
    • 10 Posts
    • 8 Thanks
    6pac
    • #9
    • 9th Sep 19, 5:33 PM
    • #9
    • 9th Sep 19, 5:33 PM
    I’m not paying into the pension or national insurance at the moment. I plan to wait until retirement age and then pay what I owe.
    • BoGoF
    • By BoGoF 9th Sep 19, 6:26 PM
    • 5,309 Posts
    • 5,172 Thanks
    BoGoF
    You may find it's too late then to fill in missing NI years.

    Suggest you get a state pension forecast.
    • 6pac
    • By 6pac 9th Sep 19, 6:49 PM
    • 10 Posts
    • 8 Thanks
    6pac
    no way! I didnít realise that there was a time limit to it, I thought you just needed to pay a certain amount before your retirement date. Thanks again GoGoF Iíll get on to the forecast straight away.
    • Dazed and confused
    • By Dazed and confused 9th Sep 19, 7:33 PM
    • 5,388 Posts
    • 2,860 Thanks
    Dazed and confused
    Make sure you look past the headline. Which may be that your forecast is £168.60.

    What matters is the next bit, how much you have earned so far. And how many years you need to reach £168.60.

    If you are under £168.60 then remember in theory each extra year buys you £4.81 but in this situation you cannot exceed £168.60 so if you have a current entitlement of say £163.00 one extra year will take you to £167.81. A second year will only take you to £168.60, it won't add another £4.81

    You may already be over £168.60 in which case you cannot improve your forecast.

    Don't forget if you have worked for part of this tax year you may have already earned another year towards your State Pension although this won't show on your forecast until after April next year.

    And you can in theory earn £18,500 in taxable interest before you have any tax to actually pay (£12,500 Personal Allowance + £5,000 savings starter rate of tax (0%) + £1,000 savings nil rate of tax (0%). But any earnings will reduce that, potentially down to £1,000. Or less if you earn enough.
    • 6pac
    • By 6pac 9th Sep 19, 7:40 PM
    • 10 Posts
    • 8 Thanks
    6pac
    Wow that’s confused me lol.
    The forecast says
    “You have:
    34 years of full contributions”

    Do I only have to pay for 35 years?
    I have 16 years left till my retirement age.
    • BoGoF
    • By BoGoF 9th Sep 19, 7:43 PM
    • 5,309 Posts
    • 5,172 Thanks
    BoGoF
    But how much is your projected pension?
    • Dazed and confused
    • By Dazed and confused 9th Sep 19, 7:55 PM
    • 5,388 Posts
    • 2,860 Thanks
    Dazed and confused
    The 35 years rule doesn't apply to you.

    You are under transitional rules which can mean 30 years might be enough. Or you could need 40+ years.
    • 6pac
    • By 6pac 9th Sep 19, 7:57 PM
    • 10 Posts
    • 8 Thanks
    6pac
    Sorry for the delay, it says

    You need to continue to contribute National Insurance to reach your forecast

    Estimate based on your National Insurance record up to 5 April 2018
    £164.31 a week
    Forecast if you contribute another year before 5 April 2034
    £168.60 a week
    • p00hsticks
    • By p00hsticks 9th Sep 19, 8:03 PM
    • 7,151 Posts
    • 7,903 Thanks
    p00hsticks
    Sorry for the delay, it says

    You need to continue to contribute National Insurance to reach your forecast

    Estimate based on your National Insurance record up to 5 April 2018
    £164.31 a week
    Forecast if you contribute another year before 5 April 2034
    £168.60 a week
    Originally posted by 6pac

    So you only need one more year from April 2018. If I were you I'd check your forecast again in a few months to see if 2018-19 has been included as a full year.
    • 6pac
    • By 6pac 9th Sep 19, 8:07 PM
    • 10 Posts
    • 8 Thanks
    6pac
    Brilliant, thank you very much everyone for your input, I’m so glad I joined the forum, having worked on paye all my life I’ve never had to worry about stuff like this before. It’s been a great help.
    • t0rt0ise
    • By t0rt0ise 9th Sep 19, 10:20 PM
    • 3,283 Posts
    • 2,084 Thanks
    t0rt0ise
    Having money saved in an isa is no longer worth while then?
    Originally posted by 6pac
    It depends what you do in the future. If you go back to work it would be good to have less tax to pay on interest, and/or when you retire if you have enough pensions, private plus state, you might need tax free interest. So you might regret not putting some of your savings in ISAs bit by bit until then.
    • getmore4less
    • By getmore4less 10th Sep 19, 6:48 AM
    • 37,426 Posts
    • 23,108 Thanks
    getmore4less
    I recently took voluntary redundancy and Iíve decided to live off my savings. (I have no income and donít receive any benefits) I was wondering how being a none tax payer would effect the interest I get on my savings?
    From what Iíve read a 20% tax payer can earn £1000 per year without paying tax but I canít find any info for the rules if I earn nothing at all. Am I missing something obvious?
    Originally posted by 6pac

    The first tax year(19-20) will be different, unless recently is more than 5 months ago therefore no earning in this tax year.
    You will have earned this year and there may be surplus redundancy that is taxed.

    ISA still have a place as a tax wrapper if also investing as you get protection from income and CGT.

    don't forget your P50.
    https://www.gov.uk/government/publications/income-tax-claiming-tax-back-when-you-have-stopped-working-p50
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