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Saving tips for 2012
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How much are we taxed on our savings and how is this applied?

 

How much are we taxed on our savings and how is this applied?

"Interest on savings is treated as income," explains Jane Heyman, Chartered Financial Planner from McCarthy Taylor, "Basic Rate tax is deducted before interest is added (unless it is in a cash ISA where there is no tax liability)."

"If you are a non tax payer and the interest earned when added to your income does not result in you becoming a tax payer, you can complete an R85 form and hand it in to your bank or building society and they will pay your interest without deducting tax."

"This form should be available as part of the application process for a savings account." says John Lawson of Standard Life, "Basic rate taxpayers have no additional tax liability – just the 20% tax automatically deducted by the bank or building society. "

"Higher rate tax payers or basic rate tax payers who become higher rate tax payers when interest is added will need to declare any interest on a self assessment form and will pay additional tax." adds Heyman.

According to Lawson "your bank or building society will provide you with a certificate of interest at the tax year end so that you know the correct amount to declare."







  
  


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Article Plan Saving tips for 2012
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