Hi, I am a pensioner with income totalling approximately £18500 pa; should I be claiming interest gross from savings?
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padstow
1 year ago
Expert Financial Adviser Answer
Darren Smith
answered 1 year ago
Hello,
no i am afraid you are not entitled to gross interest. even with the highest age allowance which starts at age 75 your earnings are almost double the personal allowance. in determining your tax rate HMRC look at all sources of income, state pension, private pensions, rental and investment income (dividends and interest payments.)
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no i am afraid you are not entitled to gross interest. even with the highest age allowance which starts at age 75 your earnings are almost double the personal allowance. in determining your tax rate HMRC look at all sources of income, state pension, private pensions, rental and investment income (dividends and interest payments.)
Expert Financial Adviser Answer
John Stirling
answered 1 year ago
As Darren says you certainly seem to be exceeding the nil rate band, however I'd just ask you to think about what you mean by 'income'. Some forms of money coming into the household do not contribute towards your taxable income, and if some or much of your income falls into this category then you may have a case. Also if you are married, and your income is joint then you may be able to structure things in such a way that it takes you out of the tax bracket.
But to an initial glance at least, your income is sufficient that you should be paying income tax on your savings I'm afraid
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But to an initial glance at least, your income is sufficient that you should be paying income tax on your savings I'm afraid
Expert Financial Adviser Answer
Richard Salter
answered 1 year ago
It certainly sounds like you should be paying basic rate tax, currently 20% on all inocme (from all sources - i.e earnings, incl co car and other employee benefit packages, bank and BS interest, and any inocme from non ISA investments). If in doubt you should be completing a self assessment return as there is a legal obligaiton to declare your annual income (April to April), work out the tax liability and settle up no later than 31st Janaury follwing the end of the relevant tax year.
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Expert Financial Adviser Answer
Richard Salter
answered 1 year ago
oh and don't forget to declare any inocme from letting out property and for that matter capital gains you might make when selling items at a profit (though CGT does benefit from its own £10,100 annual exemption). So only gains made on disposals in the last tax year worth more than £10,100 will attract this tax.
If your question is about avoiding tax by using an offshore bank acocunt and getting interest paid gross this may work so long as the account and any interest it earns reman offshore. As soon as yo ubring any of the proceeds into the UK however there will most certianly be a charge to income tax (and there may be a withholding tax in the country whose jurisdiction the offshore account is held)
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If your question is about avoiding tax by using an offshore bank acocunt and getting interest paid gross this may work so long as the account and any interest it earns reman offshore. As soon as yo ubring any of the proceeds into the UK however there will most certianly be a charge to income tax (and there may be a withholding tax in the country whose jurisdiction the offshore account is held)
Expert Financial Adviser Answer
Dr David Carter FPFS
answered 1 year ago
You don't state whether you are single or married. If you are married or in a civil partnership, and your wife/partner happens to be a non-taxpayer, then consider passing your savings across, so that your wife/partner could receive the income gross, with no tax due.
In particular, pay heed to John Stirling's wise comment - that you should try to structure things (ie between you and any wife/partner) to take you out of, or at least to reduce, the overall tax you have to pay.
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In particular, pay heed to John Stirling's wise comment - that you should try to structure things (ie between you and any wife/partner) to take you out of, or at least to reduce, the overall tax you have to pay.