Tax code changes

[RobertT]

Personally I set up a second SIPP as a tax efficient home for a bit of cash.
Even those without a job, can pay in £2,880 net per year which is grossed up to £3,600.

There's also the potential to make use of your spouses unused ISA, pension and savings allowances.

I quite like Premium Bonds and have held some for most of my life, and most months they provide a handy tax free income.

[freespeech]

Personally I set up a second SIPP as a tax efficient home for a bit of cash.
Even those without a job, can pay in £2,880 net per year which is grossed up to £3,600.

There's also the potential to make use of your spouses unused ISA, pension and savings allowances.

I quite like Premium Bonds and have held some for most of my life, and most months they provide a handy tax free income.

I'm wary of setting up a SIPP given Pension recycling rules. Should I be?

[tractorboy2]

I rang the HMRC , and the person I spoke to told me that the untaxed interest had to be deducted from my personal allowance so that I didn't pay tax on it.I tried to explain that the starter rate hadn't been taken into account only the PSA , he said something about my earnings excluding savings interest being under my personal allowance affecting the starter rate , made no sense to me.

Nor me.

If your earnings are over £12,570 that will affect the starting rate for savings, but not if they're under!

It sounds like they're factoring in some other income they think you've had, or previously not paid enough tax on.

No , they have taken last years savings interest and applied it to this year expecting me to earn the same amount , I will be getting less savings interest this year as opposed to 24/25 by almost 50%.My tax codes will probably not change again till next December.
The issue for 26/27 is the pension will rise in April and I turn 65 in November and so will be due my Age65 benefits and my income will then be over £12570 (it may stay just under that as I will only get up to 5 full months pension inclusive of age 60 and 65).
My savings interest will be a lot less as well , as all will be in ISA's.

[RobertT]

No , they have taken last years savings interest and applied it to this year expecting me to earn the same amount , I will be getting less savings interest this year as opposed to 24/25 by almost 50%.My tax codes will probably not change again till next December.
The issue for 26/27 is the pension will rise in April and I turn 65 in November and so will be due my Age65 benefits and my income will then be over £12570 (it may stay just under that as I will only get up to 5 full months pension inclusive of age 60 and 65).
My savings interest will be a lot less as well , as all will be in ISA's.

So they're treating your savings interest is earned income?

Challenge it:
https://www.gov.uk/tax-appeals

[RobertT]

Personally I set up a second SIPP as a tax efficient home for a bit of cash.
Even those without a job, can pay in £2,880 net per year which is grossed up to £3,600.

There's also the potential to make use of your spouses unused ISA, pension and savings allowances.

I quite like Premium Bonds and have held some for most of my life, and most months they provide a handy tax free income.

I'm wary of setting up a SIPP given Pension recycling rules. Should I be?

Not if you stick to the rules:
https://www.unbiased.co.uk/discover/pen ... -the-rules

If you're only going to put in £3,600(gross), there's nothing to worry about.

[tractorboy2]

No , they have taken last years savings interest and applied it to this year expecting me to earn the same amount , I will be getting less savings interest this year as opposed to 24/25 by almost 50%.My tax codes will probably not change again till next December.
The issue for 26/27 is the pension will rise in April and I turn 65 in November and so will be due my Age65 benefits and my income will then be over £12570 (it may stay just under that as I will only get up to 5 full months pension inclusive of age 60 and 65).
My savings interest will be a lot less as well , as all will be in ISA's.

So they're treating your savings interest is earned income?

Challenge it:
https://www.gov.uk/tax-appeals

Hi RobertT I copied the following from a thread on the MSE forum

There are no "allowances" for savings interest.

But there are two 0% tax rates.

Firstly taxable interest uses any unused Personal Allowance.

Once that has been used you can use any savings starter rate band available (up to £5,000 taxed at 0%)

And only once that has been used can you make use of the savings nil rate band (aka Personal Savings Allowance) (up to £1,000 taxed at 0%).

I'm still confused though.

[RobertT]

What you've quoted there, just confirms how we both believe the system works.

None of what you've previously posted makes much sense to me, as it seems to go against the rules associated with the 'starting rate for savings' and the 'personal savings allowance'.

Why would they take your interest off your personal allowance, if your income is less than that figure?

[freespeech]

What you've quoted there, just confirms how we both believe the system works.

None of what you've previously posted makes much sense to me, as it seems to go against the rules associated with the 'starting rate for savings' and the 'personal savings allowance'.

Why would they take your interest off your personal allowance, if your income is less than that figure?

Funnily enough I've had the same issue with HMRC as has my wife. I only found out that my tax code had been changed through my online tax account. HMRC had applied an expectation that my savings interest would be above my £1000 allowance. This was the case last year but not for this year. When I called them they confirmed it was NOT due to the banks informing them of actual interest. I can only assume that they are trying to take the tax within the tax year (which makes sense) rather than having to change the code for the following year. However, if they are over riding info from banks and my own estimation within the tax account I think they are overstepping the mark.

[tractorboy2]

The guy I spoke to told me I still wouldn't pay any tax this year. I tried explaining that my pension will increase in April and again in November and I would be liable for some tax with the codes I have been given. I also told him that my savings interest would be lower and that the interest I had been paid so far this year is all the interest I would receive.He pretty much said they can't do anything about that till next November when they get notified by the bank (and anyone else that paid you).

Looks like I'm going to have fun next year , I'm going to have to change my earnings in April and again in November
As I am due my age65 benefits next November does anyone know if the current statement figures are increased the same amount as pension already being paid ?
I want to try and work out what income I will receive 26/27.

[freespeech]

The guy I spoke to told me I still wouldn't pay any tax this year. I tried explaining that my pension will increase in April and again in November and I would be liable for some tax with the codes I have been given. I also told him that my savings interest would be lower and that the interest I had been paid so far this year is all the interest I would receive.He pretty much said they can't do anything about that till next November when they get notified by the bank (and anyone else that paid you).

Looks like I'm going to have fun next year , I'm going to have to change my earnings in April and again in November
As I am due my age65 benefits next November does anyone know if the current statement figures are increased the same amount as pension already being paid ?
I want to try and work out what income I will receive 26/27.

Do you have a personal tax account online? You can update that to show expected income sources and amounts.

[tractorboy2]

The guy I spoke to told me I still wouldn't pay any tax this year. I tried explaining that my pension will increase in April and again in November and I would be liable for some tax with the codes I have been given. I also told him that my savings interest would be lower and that the interest I had been paid so far this year is all the interest I would receive.He pretty much said they can't do anything about that till next November when they get notified by the bank (and anyone else that paid you).

Looks like I'm going to have fun next year , I'm going to have to change my earnings in April and again in November
As I am due my age65 benefits next November does anyone know if the current statement figures are increased the same amount as pension already being paid ?
I want to try and work out what income I will receive 26/27.

Do you have a personal tax account online? You can update that to show expected income sources and amounts.

Yes I do. I plan to do that in April.

[tractorboy2]

Does anyone know the answer to the following ?

As I am due my age65 benefits next November does anyone know if the current statement figures are increased in April by the same amount as pension already being paid(4.5% for section C) ?

[twoloops]

Hi RobertT

Personal Allowance 12570
Less Untaxed Interest 3104

Strangely my amount owned was excellently the same, did you receive a payment when the share save ceased?

[RobertT]

Does anyone know the answer to the following ?

As I am due my age65 benefits next November does anyone know if the current statement figures are increased in April by the same amount as pension already being paid(4.5% for section C) ?

Section C pensions are uprated by CPI in deferment and RPI in payment.

[tractorboy2]

Does anyone know the answer to the following ?

As I am due my age65 benefits next November does anyone know if the current statement figures are increased in April by the same amount as pension already being paid(4.5% for section C) ?

Section C pensions are uprated by CPI in deferment and RPI in payment.

Thanks RobertT. CPI was 3.8% if I remember correctly.

I used the calculator on the RMPP website which just gave the same figures as my last statement.