Tax on savings

Select coaches said:
Tax take is the biggest since the war, the more they take the more they waste
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And how much has the pension bill gone up? Advancements in medical science enable us to do more stuff but ultimately is expensive for the NHS. If we want a healthy longer life in retirement, we need to pay for it out of taxes.
 


When the state pension rises to £221.20 a week which is about 11.5k I would hope it is still tax free if the personal allowance doesn't go up accordingly. Currently £12570 means if the marriage allowance is claimed ie £1260 then the person who gives that away would pay some tax doing the maths albeit not much.
 
Exile in Ayr said:
When the state pension rises to £221.20 a week which is about 11.5k I would hope it is still tax free if the personal allowance doesn't go up accordingly. Currently £12570 means if the marriage allowance is claimed ie £1260 then the person who gives that away would pay some tax doing the maths albeit not much.
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The upcoming Budget really needs to look at the income tax thresholds as they have been frozen for a few years which has dragged millions of people into the basic and higher tax rates. The number of people paying the 40% rate has gone up massively.
 
Darlo1973 said:
The upcoming Budget really needs to look at the income tax thresholds as they have been frozen for a few years which has dragged millions of people into the basic and higher tax rates. The number of people paying the 40% rate has gone up massively.
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Martin Lewis often mentions fiscal drag. Someone on a state pension, with a very small private pension will be paying. If the tax threshold does not move and the state pension goes up, every person on a state pension will be paying tax, not sure if that has happened b4.
 
mackem35 said:
Martin Lewis often mentions fiscal drag. Someone on a state pension, with a very small private pension will be paying. If the tax threshold does not move and the state pension goes up, every person on a state pension will be paying tax, not sure if that has happened b4.
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Ten years ago, the weekly state pension was 70% of the annual allowance which meant that pensioners could have a small state pension or even a part time job without paying tax. From April this year it will be 92% of the threshold so it would only take a very small second income to make them a taxpayer.

Already happens to my mam who has a small widow's pension from my dad's occupational scheme. It's only about £150 a month - and goes to pay for some treats - but is already taxed.

Further up the income scale the number of 40% taxpayers has almost doubled in the same time. This has allowed the government to increase tax revenues (or "burden") without actually raising tax rates. It's not a new trick, Gordon Brown used the same trick when he was Chancellor. The Coalition government then brought in big rises to the allowance before recent Chancellors have frozen it again.
 
42 said:
The way it works is that standard rate tax payers pay 0% on 1st £1000 of interest, higher rate payers its £500. The banks report the income savings to HMRC, then they adjust your tax code accordingly.

Then everyone has a £20k pa isa allowance also
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Do the banks pass savings interest onto hmrc ? Why do they ask on a tax return if they know anyway ?
 
Darlo1973 said:
Ten years ago, the weekly state pension was 70% of the annual allowance which meant that pensioners could have a small state pension or even a part time job without paying tax. From April this year it will be 92% of the threshold so it would only take a very small second income to make them a taxpayer.

Already happens to my mam who has a small widow's pension from my dad's occupational scheme. It's only about £150 a month - and goes to pay for some treats - but is already taxed.

Further up the income scale the number of 40% taxpayers has almost doubled in the same time. This has allowed the government to increase tax revenues (or "burden") without actually raising tax rates. It's not a new trick, Gordon Brown used the same trick when he was Chancellor. The Coalition government then brought in big rises to the allowance before recent Chancellors have frozen it again.
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Tories have doubled tax free allowance but let the 40% bracket drag many more people into the higher rate.
JAZZMANB said:
Do the banks pass savings interest onto hmrc ? Why do they ask on a tax return if they know anyway ?
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Used to always be taxed at source
 
JAZZMANB said:
Do the banks pass savings interest onto hmrc ? Why do they ask on a tax return if they know anyway ?
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Yeah they do, almost all institutions do. It's the one thing HMRC have got better at over the last ten years or so. National and international information.

That's how a lot of compliance enquiries start. A recky of the information received married up against the return info. Any discrepancy and a tentative letter is sent out if you cannot justify it or try to lie they will look deeper if they see value in it.
 
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JAZZMANB said:
Do the banks pass savings interest onto hmrc ? Why do they ask on a tax return if they know anyway ?
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Yes. Financial Institutions have to report to HMRC. Those reports aren't always 100% accurate, like every other business and govt dept.

Not sure how the tax return works nowadays, with the Making Tax Digital thing (or even if that has been introduced yet), but previously a tax return would need all income. Example scenario, some income taxed at source stuff may be lower rate, but you might have income from elsewhere in the year that would bump it into higher rate. HMRC may not know about that other income, and the financial institutions certainly wouldn't. I think the new digital system was supposed to pre-populate known information like PAYE. Don't quote me on that though.
 
halfman said:
Yes. Financial Institutions have to report to HMRC. Those reports aren't always 100% accurate, like every other business and govt dept.

Not sure how the tax return works nowadays, with the Making Tax Digital thing (or even if that has been introduced yet), but previously a tax return would need all income. Example scenario, some income taxed at source stuff may be lower rate, but you might have income from elsewhere in the year that would bump it into higher rate. HMRC may not know about that other income, and the financial institutions certainly wouldn't. I think the new digital system was supposed to pre-populate known information like PAYE. Don't quote me on that though.
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There's a section on the return asking for interest earned off savings . I'm only in my second year of doing a self assessment
I went self assessment because my employer was crap at it and I had a company share windfall so I wanted to do it myself .
This last return ,non of the " comments " boxes worked online so I couldn't put any detail etc
I even rang my mate who works there and he just said it's hopeless .
 
Select coaches said:
I’m not saying it will definitely work but it’s an idea that needs looking at. Every person gets a flat amount per week as a benefit, no personal allowance and everything they earn is taxed at a pre-determined flat rate. Imagine all the beaurocracy it will save. No dole office, work as much or as little as you want.
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Do you mean flat tax or universal income?
 
mackem35 said:
Martin Lewis often mentions fiscal drag. Someone on a state pension, with a very small private pension will be paying. If the tax threshold does not move and the state pension goes up, every person on a state pension will be paying tax, not sure if that has happened b4.
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They won't let that happen.
 

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