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?

[MrsFrugal]

@Oakbeam

I can’t be bothered to move it

Well stop moaning then. FFS!

I didnt say that @Oakbeam

[Bigweekend]

You think saving and being frugal is a good thing and it might be for you personally, but it's dar better for the economy for you to spend that money and get it circulating.

If you're notngoing to do that it's right that you pay tax on the income

[GasPanic]

Yet another top tip for the day.

Avoid paying tax on your interest by simply moving your money into an account that doesn't require you to pay tax on your interest.

[Tratjymp]

Pity the cash ISAs I see appear to be lowish interest.

Interest on savings accounts is an "income" that is less than the amount our deposit is being diminished by inflation. I'm another one who grudges paying tax on it!

[MrsFrugal]

@Bigweekend

You think saving and being frugal is a good thing and it might be for you personally, but it's dar better for the economy for you to spend that money and get it circulating.

If you're notngoing to do that it's right that you pay tax on the income

@Bigweekend we have bought a old house which needs a lot of work and I am spending I can assure you, this week Iv already paid for scaffolding, a fire installation, roof repairs and a dry rot treatment, just because I am saving doesn't mean I am not spending either, despite being frugal I know we don't have enough for everything that needs doing but we are doing a bit at a time

[Chickenly]

@latetothefisting

Are you sure about this? Mse says anything over 34,500 on the current top easy access savings rate of 2.9% for basic rate tax payers would start owing tax

www.moneysavingexpert.com/savings/personal-savings-allowance/

There’s two people though

[pissssedofff]

@Tratjymp

Pity the cash ISAs I see appear to be lowish interest.

Interest on savings accounts is an "income" that is less than the amount our deposit is being diminished by inflation. I'm another one who grudges paying tax on it!

Spend it then.

[MrsFrugal]

@GasPanic

Yet another top tip for the day.

Avoid paying tax on your interest by simply moving your money into an account that doesn't require you to pay tax on your interest.

No one forced you to engage here. Maybe consider spending more time on topics that help you and your personal circumstances.

[safeplanet]

@AreOttersJustWetCats exactly, mine have only just recovered

[Blossomtoes]

@crosspusscrossstitcher

I don't understand how they can tax interest on savings.
Where did the savings come from in the most part - income - so you're being taxed on the same income twice.

Just as you are when you fill your car up and buy anything except food. Except the interest is new income which hasn’t been taxed before because it didn’t exist.

[safeplanet]

You must have an awful lot in there!

[safeplanet]

I have money in the Jupiter one and it's not great due to US tech performance

[FelicityFlops]

@GPTec1 12% drop in energy prices in Germany, if I read correctly. I hope for some happy post when I next go home, then! :-)
I very much doubt, at this stage, when we are now sending tanks to Ukraine, that this will be passed on quickly - if at all!

[OpportunityKnockss]

safeplanet Do you move your funds around, I do frequently? For example when my FTSE all share tracker was only up about 3% recently I moved quite a bit of money from other funds into it and now it’s up 10.87%.

[safeplanet]

@OpportunityKnockss I only review about 1-2 a yr as my ISAs are long term savings. I haven't moved any money out of funds since covid but did stop feeding money into some.

I have some money in Freetrade where I am a bit more reactive & proactive. Tbh I have money in S&S & cash ISAs for me, the dc, then there are pensions, PBs & savings accounts. I don't really have the time for much involvement.

[alwayscheery]

Barclays offer a 4% cash isa , virgin offer similar and premium bonds are tax free.

[ChilliBandit]

@MrsFrugal

Your post has made me laugh (in a nice way), I suppose we all want what benefits us personally. i.e commuting for you/savings for me

Not paying tax on savings would also benefit me, it just doesn’t bother me paying tax on money I haven’t done anything to earn honestly.

[DdraigGoch]

@GPTec1

To be fair, the UK's inflation is staying a lot higher than other countries inflation rates, despite having the same supply shocks.
Germany 8.6% (just seen a 12% drop in energy prices too)
France 6.6%
USA 8.5%

Germany has long been terrified of hyperinflation (no surprise given what happened to the Weimar Republic). Therefore I suspect that their fiscal policy (and their influence on the fiscal policy of the ECB) has been rather more conservative than ours was. I doubt that they did anything like as much quantitative easing during and after the credit crunch.

[Daniella36]

So, what will you do? When will you say "enough"?

[Florenz]

We pay far too much tax in this country. Far too much.

[DdraigGoch]

@Florenz

We pay far too much tax in this country. Far too much.

Compared with whom? Certain people and organisations aren't paying enough.

[IMissThe80s]

@DdraigGoch

Compared with whom? Certain people and organisations aren't paying enough.

This is true. Compared to our neighbours we concentrate the tax take on too few higher earners.

Middle and lower earners in the U.K. really pay very little.

[Blossomtoes]

The Guardian has an interesting article on taxation today:

Evidence of tax distortions benefiting only the rich mount up by the week. The Institute for Fiscal Studies’ TaxLab lists an array of wasteful tax reliefs. The latest example comes from the Resolution Foundation thinktank, which has identified “five terrible tax breaks”, used by just 70,000 individuals, that deprive the public realm of £4bn.

It notes that the UK’s “myriad tax reliefs are hugely expensive and yet are rarely assessed for their efficacy or value for money”. Tax reliefs together cost £195bn in 2020-21. As for the five obscure tax reliefs, which concern business and agricultural inheritance: “There is little evidence that these policies have encouraged more people to save, and conclusive evidence that rich individuals have gained the lion’s share.” Tax Justice UK proposes the following reforms: equalising capital gains with income tax to raise £14bn a year; applying national insurance to unearned income, which would recoup £8.6bn per year; taxing wealth over £10m at 1% to raise £10bn per year; and cutting inheritance tax loopholes, which would raise £1.4bn. Labour’s promised end to non-dom relief yields £3.2bn.

Calls for taxing wealth are growing: Nobel laureate in economics Joseph Stiglitz is the latest to argue for a 70% top tax rate on the super-rich, plus 2-3% on hyper-wealth (more than $50m) after the post-Covid wealth boom. Widening inequalities worsen in a society where inheritance, not talent, is becoming the main route to super-riches in what he calls “the sperm lottery”. Oxfam last week reported that two-thirds of the new post-pandemic surge in wealth had gone to the top 1%.

[safeplanet]

We pay far too much tax in this country. Far too much

the rich dont but tax is far more weighted on income vs wealth as @Blossomtoes post says. What you inherit is far more important than what you earn for many. I personally don't have an issue with more paying more tax, but it really annoys me that CGT is not in line with income & I want better public services.