Personal savings allowance
Discussion
I've been looking into this for a colleague. What a typical clusterf
k by the Government.
If you are a basic rate tax payer you get a £1000 allowance, if you are a higher rate tax payer you only get £500. The theory being both get a £200 tax saving,
But, the interest you receive is income and itself can carry you into the higher rate threshold. So £1 into the higher rate band can end up costing you £100 in tax!!!
k by the Government.If you are a basic rate tax payer you get a £1000 allowance, if you are a higher rate tax payer you only get £500. The theory being both get a £200 tax saving,
But, the interest you receive is income and itself can carry you into the higher rate threshold. So £1 into the higher rate band can end up costing you £100 in tax!!!
PurpleMoonlight said:
I've been looking into this for a colleague. What a typical clusterfk by the Government.
If you are a basic rate tax payer you get a £1000 allowance, if you are a higher rate tax payer you only get £500. The theory being both get a £200 tax saving,
But, the interest you receive is income and itself can carry you into the higher rate threshold. So £1 into the higher rate band can end up costing you £100 in tax!!!
If they are only just into the higher rate bracket why don't they make sufficient gift aid donations to bring them back under? They can play on their self assessment return (assuming they do it themselves) to work out the exact number if required.k by the Government.If you are a basic rate tax payer you get a £1000 allowance, if you are a higher rate tax payer you only get £500. The theory being both get a £200 tax saving,
But, the interest you receive is income and itself can carry you into the higher rate threshold. So £1 into the higher rate band can end up costing you £100 in tax!!!
https://www.gov.uk/government/publications/charita...
"You cannot carry gifts forward, but you can carry them back to the year before you actually made them, provided you paid enough tax in that year to cover the basic rate tax both on the gifts for that year and on the gifts carried back. Depending on your circumstances, this might give you tax relief at a higher or lower rate"
PurpleMoonlight said:
Does gift aid have the effect of reducing your income for HMRC purposes though?
If you look at the online self assessment submission, you will see something along the lines of"How we have worked out your income tax
Your basic rate limit has been increased by £xxx.00 to £xx,xxx.00 for Gift Aid payments.
This reduces the amount of income charged to higher rates of tax."
which, if done correctly, can pull everything back into the lower band
Jockman said:
I'm not the sharpest knife in the drawer, Derek but........that appears to be a really useful piece of advice !!
And I'm not the sharpest tool in the shed, but........ with interest rates at c.1% you need a cool 100,000 of cash savings to get anywhere near this "problem".rockin said:
Jockman said:
I'm not the sharpest knife in the drawer, Derek but........that appears to be a really useful piece of advice !!
And I'm not the sharpest tool in the shed, but........ with interest rates at c.1% you need a cool 100,000 of cash savings to get anywhere near this "problem".Derek Chevalier said:
rockin said:
Jockman said:
I'm not the sharpest knife in the drawer, Derek but........that appears to be a really useful piece of advice !!
And I'm not the sharpest tool in the shed, but........ with interest rates at c.1% you need a cool 100,000 of cash savings to get anywhere near this "problem".If Howe ever you earn £1001 in interest then, as a higher rate taxpayer, you lose £500 of the tax free savings allowance.
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