Client Services Manager Sift
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Holding your interest…

15th Jan 2016
Client Services Manager Sift
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Crude oil price plummeting, petrol and diesel have both got cheaper.

Gas and electricity wholesale prices down by a third (although admittedly the utility companies haven’t actually passed much of that on to us yet).

And there’s even talk of an interest rate rise (there’s always talk of an interest rate rise…).

So maybe now’s the time to be stuffing some of this spare hard earned into the bank, and from the 6 April 2016 if total income from all sources is less than £15,500 there is no tax to pay on all that lovely bank interest.

Yes, that old favourite the exciting 10% starting rate is abolished and replaced with a 0% rate and the threshold is being raised from £2,880 to £5,000. 

So if your client’s total income is below £15,500 (the personal allowance of £10,500 plus the new nil rate band) they can register for interest to be paid gross using form R85.

If they earn £14,000 and have £2,000 a year savings income, interest cannot paid gross but they would still be entitled to a refund on £1,600 of that savings income using good old form R40.

As a certain corporate says in its advertising “every little helps”

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By sirp2000
19th Jan 2016 12:35

Holding your interest…

But I thought the 2016/17 personal allowance was £11,000 and all interest will be paid gross, so no need for an R40.

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By Andrew Mann Keytime
20th Jan 2016 11:08

Sorry, that's my typo - the article should say from 6 April 2015. However interest will only be paid gross if the person can verify that they will not exceed the £15500 limit (or £16000 in 2016/17). It's not an universal exemption to all account holders. 

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By sirp2000
20th Jan 2016 13:45

From 6 April 2016 interest will be paid without deduction to ALL taxpayers, regardless of income level. 

See https://www.gov.uk/government/publications/income-tax-personal-savings-a...

"Alongside this new savings nil rate, Part 15 of ITA will be amended so that deposit-takers, building societies and NS&I will no longer be required to deduct sums representing income tax from account interest they pay to customers. Individuals who are unlikely to have tax to pay on their bank or building society interest will therefore no longer have to register with their account provider to have this interest paid without deduction."

 

 

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