paying tax on savings is a bloody con!

[MrsFrugal]

I have NC for this as I don't like to talk about money. But this has got my back up!

I am very Frugal, we have been saving as we bought a really old house that needs lots and I mean lots of work, I enjoy being savvy with money and move this around for better interest rates etc to maximise it, now I'm not talking millions here we have about 35k, both myself and DH pay the higher tax rate at 40% so the allowance for interest is £500 each before then we have to start paying tax on that! I'm probably just feeling more miffed off about it as hubby got a decent bonus recently and pretty much half of it was swiped straight away. And if we do go over the savings allowance which I will have to keep a close eye on its not going to be by much (£125ish by my calculations at the most), surely the admin fee for HMRC to process this on such a small amount costs more than what they are actually gaining. Anyway I just ranting here, feeling like its all take, take, take at the moments, nice bit of interest rise to try and cancel out a little bit of the bloody mortgage payments and that's then taxed! AIBU?

[peaceandpotato]

@MrsFrugal

Yes I will have to move some of it elsewhere, its never been a problem as the interest rates have been so low and we haven't had this much in savings before.

It's not difficult to open an ISA

[BingleBongleBoo]

Premium bonds are the way forward. My parents bought my kids 5k each a couple of months ago and now one of them has £5200 and the other not far behind.

You can put about £50k in so it's worth doing.

[TimeForMeToF1y]

@MrsFrugal

@Chickenly jealously is not a nice trait.

You don't seriously think that the posters telling you that you don't need to pay tax on your interest are jealous of you do you?

What a ridiculously childish notion

[peaceandpotato]

@BingleBongleBoo

Premium bonds are the way forward. My parents bought my kids 5k each a couple of months ago and now one of them has £5200 and the other not far behind.

You can put about £50k in so it's worth doing.

ONLY ONCE YOUVE USED YOUR ISA

[Swiftswatch]

Interest is income and you’re over the threshold. That’s literally all there is too it.

[OopsAnotherOne]

I understand you're frustrated OP but interest on savings is classed as an income, and income is taxable. As others have suggested, you can move this money to a tax efficient way of saving it so it doesn't get taxed. If you can't be bothered to do this (your own words), then you'll have to pay the tax. But there are solutions to your problem that would take literally 15 minutes to sort out.

[unicornglittersprinkles]

Opening an ISA is not always the best option. ISA interest rates tend to be much lower than normal savings rates so it's often better to pay the tax than take a hit on the rate. Martin Lewis has some good advice on this

If you pay tax on savings interest, it's often not clear whether a higher-paying normal savings account beats a cash ISA for you.
Yet, some simple maths can help you compare. Take the rate on the ISA you're looking at and multiply it by:
- 1.25 if you're a basic-rate taxpayer
- 1.66 if you're higher-rate taxpayer
- 1.82 if you're a top-rate taxpayer
The result of that sum is the rate you need to get on normal savings for it to be the winner vs the cash ISA equivalent. If normal savings don't pay more than that, then you're better off in the cash ISA.

[BubziOwl]

You can have an isa opened in no time at all just from your phone. Probably less time than you've spent posting on this thread!

[BMW6]

Well you're all kinds of a bloody fool for not spending a few minutes moving savings into ISAs or Premium Bonds because you "can't be bothered" yet spending time whingeing about paying tax on interest!

In your case its not a tax on Income, just Stupidity.

[SunsetBlue]

I've just opened a Virgin ISA - it was very easy to do online and I've moved £20k in there on 3.4% interest. I'll do the same in April so £40k tax free savings.

Everything else you do have to pay tax on the interest once it hits a certain amount. You need to plan your finances.

[Mushroo]

I agree with you OP! Considering I’ve already been taxed at 40% (higher once you take into account the ‘graduate tax’ that is student loan) it’s annoying to be further taxed for saving money (and seeking out the best interest rates which are still lower than inflation).

I do use my ISA and premium bonds, but have a few other accounts dotted about. It’s not just the tax, it’s the fear I’ll accidentally go over and be hit with a fine from HMRC.

[DdraigGoch]

@MrsFrugal

its a free country and yes I do get to complain just like I am right now!

No such thing as "free". Schools, hospitals etc. cost money, they have to be paid for somehow.

[MrsFrugal]

@TimeForMeToF1y

You don't seriously think that the posters telling you that you don't need to pay tax on your interest are jealous of you do you?

What a ridiculously childish notion

It was more the arsey 'this is a joke - you have to much money' comment really that's annoyed me, happy to take advise all day long but not from rude people

[MrsFrugal]

@SunsetBlue

I've just opened a Virgin ISA - it was very easy to do online and I've moved £20k in there on 3.4% interest. I'll do the same in April so £40k tax free savings.

Everything else you do have to pay tax on the interest once it hits a certain amount. You need to plan your finances.

thanks @SunsetBlue is this a fix term ISA? thats a good rate

[MrsFrugal]

@DdraigGoch

No such thing as "free". Schools, hospitals etc. cost money, they have to be paid for somehow.

@DdraigGoch context

[Dagnabit]

It does seem unfair but you need to stick some of it in an ISA so you can avoid it. Still keep as much as you can in other savings accounts as well. Doesn’t help that interest in an ISA is really crap.

[Sqqueeeeeeee]

@MrsFrugal

It was more the arsey 'this is a joke - you have to much money' comment really that's annoyed me, happy to take advise all day long but not from rude people

Some people would find your goady and deliberately twee-naive post “rude” tbh. You didn’t ask for advice, you asked if YABU…you are btw

[MrsFrugal]

@Sqqueeeeeeee

Some people would find your goady and deliberately twee-naive post “rude” tbh. You didn’t ask for advice, you asked if YABU…you are btw

Well then keep scrolling! no need to read or engage

[Chickenly]

@Dagnabit

It does seem unfair but you need to stick some of it in an ISA so you can avoid it. Still keep as much as you can in other savings accounts as well. Doesn’t help that interest in an ISA is really crap.

That’s the point! The more money moves, the better the economy. Money locked up in savings damages the economy. Low interest and taxes on interest encourage people to spend or invest their savings instead, which benefits the economy. If everyone were encouraged to stick their money in an account and not to touch it then ir economy would fall apart.

[GreetingsToTheNewBrunette]

OP - AIBU?
MN - yes, move to a tax free saving option
OP - wrong! you’re all just well jel

🙄

[MrsTerryPratchett]

If you look at my posting history, you’ll see I earn far more than you and have more in assets. It’s not jealousy. I just think (like most people) that those who have excess should pay more tax and, frankly, that if you want to avoid paying tax then you should do the two minutes of admin instead of just whinging.

@Chickenly has it. Noblesse oblige as it were.

[Sqqueeeeeeee]

@MrsFrugal

Well then keep scrolling! no need to read or engage

Do you not recognise the irony in what you just said? You made a (dumb) comment because you thought someone was rude but you object to other people commenting and calling you rude. As has already been asked, why do you think you’re the only person who’s allowed to have an opinion?

[peaceandpotato]

Try a stocks and shares isa?

[peaceandpotato]

Have you looked and money-saving expert?

[AreOttersJustWetCats]

This is why ISAs exist. Its not anyone else's fault if you choose not to use your ISA allowance.