Tax q - it's a quickie, I promise

[wd*]

no, not a quickie in return :P

I asked my bank twice for a tax certificate and they have faffed me about, and eventually they gave me a print out of 'interest and tax details'. I know I should know this, but can someone decipher these for me:

Quote:
Total Interest: £22.46 Dr
Income Tax deducted: £1.82
Total Interest Credited: £24.82 Dr


Now, did I get £22.46 added on, or did they deduct £22.46 from my bank account?

And likewise:

Quote:
Total Interest: £7.94 Dr
Interest paid Gross: Nil
Income Tax deducted: Nil
Total Interest Credited: £7.94 Dr


Did I gain £7.94 or have it taken from me? (I'm always skint, lol)

Also, I have an NS&I savings account. In the paperwork it says you get an allowance of £70 interest.

Does anyone know the interest rate on a normal NS&I savings account, and do I need to submit anything to prove all this working out other than the form?

Any help gratefully received, as I am just finishing off my tax return!

[Eric Mc]

On the face of it, these figures seem to relate to interest they have GIVEN to you i.e. credited to your bank accounts.

When a bank pays an individual interest (usually on a deposit or savings account - but many current accounts give interest these days as well), in most circumstances they are obliged to deduct tax at source on the interest before it hits your bank account. The normal rate used for this tax (which is called "Composite Rate Tax and is NOT income tax) is 20%. The strange aspect of the figures you are quoting is that the tax shown of £1.82 is not 20% of the Gross Interets you show of £24.82 - it equates to approximately 7%. In fact, the figures you show actually do not add up. Interest of £24.82 less tax of £1.82 does not equal £22.46. Was the Gross interest really £24.28 by any chance?

Regarding the interest received of £7.94, why did the bank not deduct tax on that? They are legally obliged to do so unless the owner of the bank account is a non-tax payer.
As they have deducted tax on one account and not on the other, one of them must be wrong.

[wd*]

I have a feeling I am down as being a non-taxpayer, as at the time I took the aco out, I was a student. The other account is the joint account with my husband. I have copied word for word and figure for figure what is written on what I was given.

To confuse things further, I have just found the actual tax certificate that I was sent for the account showing the higher amounts.

Gross Interest: £12.78
Income Tax Deducted: £1.84
Net interest paid: £10.94

As you can see, they don't remotely match what I was given in branch. As I said, what he gave me in branch was a print out of 'statement and tax details' wheras the second set of figures are taken from an actual tax certificate - despite me requesting them twice they have still only sent it for one account.

I wont need to pay any tax as I haven't earned anywhere near the threshold (for last tax year i was mystery shopping, so no sales or anything involved, just payment from the various companies) but I want to get it right, and it would be good to know how to do it properly for next year when it is going to be far more complex for me!

[Eric Mc]

If you are a non-tax payer, why have yuou been issued with a Self assessment tax return?

[wd*]

Because I am registered self-employed, but as I said, I think at the time I opened the account, I went down as not paying tax.

[Eric Mc]

If you earned less than £4,895 for the year to 5 April 2006, you should still not be liable for tax (or national insurance). If the bank has taken any tax at source from any interest you received on ANY of your accounts, then you should be entitled to a refund of that tax.

If you do not trust the details the bank has given you, you should still be able to work out the interest you received by going through your bank statements month by month and extracting the interest credited to the accounts as shown on the statements.