tax on savings taxable after 1k is it automatic or self declaration??

[big-all]

Just for clarity:

His job pays approx £12k a year

He received approx £4k interest on savings he has, non ISA.

Will he get taxed on that interest as it wasnt deducted by bank..

yes 1k is tax free 3k is taxed at 20% as a basic tax payer so 1/5th off 3k so 200x3= £600 unfortunatly
needs to convert savings to isa based packages the maximum each year [20k at present] year after year to maximize the tax free amount

 

[Mottie]

Just for clarity:

His job pays approx £12k a year

He received approx £4k interest on savings he has, non ISA.

Will he get taxed on that interest as it wasnt deducted by bank..

Actually, looking at the following, if his salary is £12k a year, he may not have to pay any tax on his £4K interest. A simple call to the tax office should clear it up.

Personal Allowance​

You can use your Personal Allowance to earn interest tax-free if you have not used it up on your wages, pension or other income.

Starting rate for savings​

You may also get up to £5,000 of interest and not have to pay tax on it. This is your starting rate for savings.

The more you earn from other income (for example your wages or pension), the less your starting rate for savings will be.

If your other income is £17,570 or more​

You’re not eligible for the starting rate for savings if your other income is £17,570 or more.

If your other income is less than £17,570​

Your starting rate for savings is a maximum of £5,000. Every £1 of other income above your Personal Allowance reduces your starting rate for savings by £1.

 

[Koolpc]

Actually, looking at the following, if his salary is £12k a year, he may not have to pay any tax on his £4K interest. A simple call to the tax office should clear it up.

Personal Allowance​

You can use your Personal Allowance to earn interest tax-free if you have not used it up on your wages, pension or other income.

Starting rate for savings​

You may also get up to £5,000 of interest and not have to pay tax on it. This is your starting rate for savings.

The more you earn from other income (for example your wages or pension), the less your starting rate for savings will be.

If your other income is £17,570 or more​

You’re not eligible for the starting rate for savings if your other income is £17,570 or more.

If your other income is less than £17,570​

Your starting rate for savings is a maximum of £5,000. Every £1 of other income above your Personal Allowance reduces your starting rate for savings by £1.

That looks informative. I will let him know later.
Regarding ISA. As the financial year is ending next month, can he put £20k in an ISA now and then another £20k in the same ISA in April as that is the start of the next financial year?

 

[Mottie]

That looks informative. I will let him know later.
Regarding ISA. As the financial year is ending next month, can he put £20k in an ISA now and then another £20k in the same ISA in April as that is the start of the next financial year?

Yes. Assuming he hasn’t put anything in this financial year. Depending on the ISA rules, some fixed rate ISA's only allow deposits for a certain period of time from opening them. If he wants a fixed rate one, he may have to open a variable rate one in this year (with no early closure penalties) and transfer that plus any new amount into a fixed rate one in April.