Tax on saving stream interest?
Discussion
Hello All,
I've just opened a Saving Stream account that I'm looking at putting some money into (currently just put £100 in to test).
If it makes any difference, I'm looking at re-investing the interest back into Saving Stream.
I wonder where I stand with tax. Unfortunately (or fortunately) I'm bang on the 40% threshold on a PAYE 9-5 job.
I'm assuming the government want something, and I'd be a fan of minimising the amount of something they get. Legally of course!
Other things that might be relevant: I have £250 a month going into an HSBC preferential rate saver that should pay 5% in a few months.
The total I'd be wanting to put into SS would be about £4-5k per year. Probably instead of the HSBC thing.
I've just opened a Saving Stream account that I'm looking at putting some money into (currently just put £100 in to test).
If it makes any difference, I'm looking at re-investing the interest back into Saving Stream.
I wonder where I stand with tax. Unfortunately (or fortunately) I'm bang on the 40% threshold on a PAYE 9-5 job.
I'm assuming the government want something, and I'd be a fan of minimising the amount of something they get. Legally of course!
Other things that might be relevant: I have £250 a month going into an HSBC preferential rate saver that should pay 5% in a few months.
The total I'd be wanting to put into SS would be about £4-5k per year. Probably instead of the HSBC thing.
Assuming that the investment is not contained within any sort of tax protected vehicle, such as an ISA, then any interest you receive will be subject to Income Tax.
However, since 6 April 2016, if your total interest received from all sources is less than £1,000, then you pay no tax on that interest.
Once your total interest exceeds £1,000, you will pay tax at your top rate whatever that happens to be (20%, 40% or 45%) on that part of the interest that exceeds the £1,000.
Banks no longer deduct tax automatically on interest.
So, you need to monitor your total interest income for the tax year to see if it remains under £1,000. If it does, you are in the clear. If it goes over £1,000, you either apply to complete a Self Assessment tax return so you can declare and pay the tax arising on the interest over £1,000 or you can contact HMRC and they will attempt to collect the extra tax through an adjustment on your PAYE coding. 9 times out of 10, if you go down the latter route they will get it wrong.
Bear in mind that your interest counts when you are adding up your total income to see how much of your income is taxable at higher rate - so even if the £1,000 or less of interest is not actually taxed, you still need to include it when arriving at your total income figure for the year.
Nice to see HMRC keeping everything simple.
However, since 6 April 2016, if your total interest received from all sources is less than £1,000, then you pay no tax on that interest.
Once your total interest exceeds £1,000, you will pay tax at your top rate whatever that happens to be (20%, 40% or 45%) on that part of the interest that exceeds the £1,000.
Banks no longer deduct tax automatically on interest.
So, you need to monitor your total interest income for the tax year to see if it remains under £1,000. If it does, you are in the clear. If it goes over £1,000, you either apply to complete a Self Assessment tax return so you can declare and pay the tax arising on the interest over £1,000 or you can contact HMRC and they will attempt to collect the extra tax through an adjustment on your PAYE coding. 9 times out of 10, if you go down the latter route they will get it wrong.
Bear in mind that your interest counts when you are adding up your total income to see how much of your income is taxable at higher rate - so even if the £1,000 or less of interest is not actually taxed, you still need to include it when arriving at your total income figure for the year.
Nice to see HMRC keeping everything simple.
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