Interest Rates

[BoldonLad]

Is this debate still going!!🤣🤣🤣🤣

If have separate ACC then must be something dodgy going on!!🔥🔥🔥🔥

If you say so.

 

[Jameshow]

If you say so.

I'm joking!!

 

[Deleted User]

Isn't there a limit on the amount of interest you can get on savings before it becomes liable to tax? I seem to remember a £1000 figure which (for some) may quite easily be exceeded with the higher rates avkailable now.

Wouldn't £1000 interest equate to about 40k in savings not accounting for the ISA allowance which is another 20k. I'm sure plenty on here do have that much.

 

[SpokeyDokey]

Isn't there a limit on the amount of interest you can get on savings before it becomes liable to tax? I seem to remember a £1000 figure which (for some) may quite easily be exceeded with the higher rates available now.

Tax allowances:

£12570 pa personal allowance - if not used by employment/pension can be offset against interest. So, if one marital partner has neither employment or pension they can hold a lot of a couple's investments - not in joint names though, before tax becomes payable.

Up to £5000 pa Starting Rate For Savings. Boosts the above figure by a maximum of £5000. Simply take any earnings/pensions below £17570 (£12570 + £5000) away from £17570 and the resulting figure can be offset against tax. So... If you have no income you have £17570 to use as offset and at the other end of the scale if you have income greater than or equal to £17570 then you have nothing to offset against tax - and all points in between. Spouses can be very handy!

£1000 pa Personal Savings Allowance - self-explanatory; £1000 of interest can be soaked up by this for persons paying max' of 20% income tax. 40% payers get £500 pa.

Isa's ~ all interest completely tax free.

Gets trickier to manage as you get older and your wealth accumulates and at some point if you have accumulated enough you will have to pay some tax on interest.

Fixed Rate Isa's are your friends - other investments eg Fixed Rate Bonds can be soaked up by a lower/no earning spouse (who can also have Isa's) and the pair of Personal Savings Allowances.

 

[Deleted User]

On top of all the above isn't it down to the individual to declare any tax owing?

I doubt the HMRC are interested In the average bod and his savings.

 

[Chislenko]

Tax allowances:

£12570 pa personal allowance - if not used by employment/pension can be offset against interest. So, if one marital partner has neither employment or pension they can hold a lot of a couple's investments - not in joint names though, before tax becomes payable.

Up to £5000 pa Starting Rate For Savings. Boosts the above figure by a maximum of £5000. Simply take any earnings/pensions below £17570 (£12570 + £5000) away from £17570 and the resulting figure can be offset against tax. So... If you have no income you have £17570 to use as offset and at the other end of the scale if you have income greater than or equal to £17570 then you have nothing to offset against tax - and all points in between. Spouses can be very handy!

£1000 pa Personal Savings Allowance - self-explanatory; £1000 of interest can be soaked up by this for persons paying max' of 20% income tax. 40% payers get £500 pa.

Isa's ~ all interest completely tax free.

Gets trickier to manage as you get older and your wealth accumulates and at some point if you have accumulated enough you will have to pay some tax on interest.

Fixed Rate Isa's are your friends - other investments eg Fixed Rate Bonds can be soaked up by a lower/no earning spouse (who can also have Isa's) and the pair of Personal Savings Allowances.

Yes, the problem comes when you are both maxed out on ISA's and both parties income is above the £12750 which has not been raised for a couple of years so effectively bringing more people into taxation.

I suppose after years of low interest rates for savers the problem of paying tax on savings at least means there is some interest to be had.

Just going off at a tangent do other savers adhere to the FSCS reimbursement limit of 170k per couple or just take a chance on your bank / building society etc not going bust.

 

[Chislenko]

On top of all the above isn't it down to the individual to declare any tax owing?

I doubt the HMRC are interested In the average bod and his savings.

Not in my experiences Shep, as for a couple of years running I actually had a tax rebate from HMRC as my actual interest earned did not match the guesstimate they built into my tax code. So it is my assumption they do monitor these things and certainly when you take out savings bonds etc with banks etc you from memory do have to give them your NI number.

 

[Deleted User]

Yes, the problem comes when you are both maxed out on ISA's and both parties income is above the £12750 which has not been raised for a couple of years so effectively bringing more people into taxation.

I suppose after years of low interest rates for savers the problem of paying tax on savings at least means there is some interest to be had.

Just going off at a tangent do other savers adhere to the FSCS reimbursement limit of 170k per couple or just take a chance on your bank / building society etc not going bust.

Once 'maxed' out you still have around 40k each before you hit a £1000 interest and if I had £100k savings between me and the missus I wouldn't really be worrying about paying a bit of tax on the interest above that.

 

[Deleted User]

Not in my experiences Shep, as for a couple of years running I actually had a tax rebate from HMRC as my actual interest earned did not match the guesstimate they built into my tax code. So it is my assumption they do monitor these things and certainly when you take out savings bonds etc with banks etc you from memory do have to give them your NI number.

Fair enough, I say this only because some yrs ago my company had a save share scheme mature where many lads cleared around 60k profit and very few declared the capital gains tax and not one of them ever got found out.

 

[SpokeyDokey]

Yes, the problem comes when you are both maxed out on ISA's and both parties income is above the £12750 which has not been raised for a couple of years so effectively bringing more people into taxation.

I suppose after years of low interest rates for savers the problem of paying tax on savings at least means there is some interest to be had.

Just going off at a tangent do other savers adhere to the FSCS reimbursement limit of 170k per couple or just take a chance on your bank / building society etc not going bust.

Yes, we are hot on the fscs indemnity limit and use the Financial Services Register to check that we are not potentially exposed by aggregated groupings of banks etc.

 

[SpokeyDokey]

Not in my experiences Shep, as for a couple of years running I actually had a tax rebate from HMRC as my actual interest earned did not match the guesstimate they built into my tax code. So it is my assumption they do monitor these things and certainly when you take out savings bonds etc with banks etc you from memory do have to give them your NI number.

HMRC pull data directly from all financial institutions and look for a corresponding match on Self Assessment forms.

I think that you get Invited to complete SA each year if you start to go over the various limits.

How they manage this complexity is beyond me.

 

[Deleted User]

Yes, the problem comes when you are both maxed out on ISA's and both parties income is above the £12750 which has not been raised for a couple of years so effectively bringing more people into taxation.

Must be a real struggle!

 

[SpokeyDokey]

Once 'maxed' out you still have around 40k each before you hit a £1000 interest and if I had £100k savings between me and the missus I wouldn't really be worrying about paying a bit of tax on the interest above that.

You might well change your mind if you had paid punitive amounts of income tax over the years as you generated £100k+ savings.

 

[Deleted User]

You might well change your mind if you had paid punitive amounts of income tax over the years as you generated £100k+ savings.

I may well do but I can genuinely say if I had over 100k in my bank and eventually started earning a bit of interest I wouldn't lose too much sleep over paying a bit of tax on it.

I don’t really worry about much but if this keeps you up a night you might want to re assess your priorities a bit.

 

[SpokeyDokey]

I may well do but I can genuinely say if I had over 100k in my bank and eventually started earning a bit of interest I wouldn't lose too much sleep over paying a bit of tax on it.

I don’t really worry about much but if this keeps you up a night you might want to re assess your priorities a bit.

Calm down Shep. I don't need, or appreciate, a lecture on priority reassessment from you. 👍

Who said it keeps me up at night anyway?