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?

[IAmTheWalrus85]

@TimeForMeToF1y

I'm going to moan about having so much money my interest is taxed but I can't be bothered to spend 5 minutes online to open an ISA


How stupid are you then ?

Yep. It probably would have taken about the same amount of time to open an ISA as it did to write the OP.

This is why ISAs exist OP. To give people the chance to earn interest tax free on the first £20,000 per year of their savings. You didn’t bother to use that tool.

If someone is wealthy enough to save more than £20k per year then it seems fair that they should pay tax on the interest.

[follyfoot37]

@Fleabigg

I’d rather more tax on interest and less tax on earned income! It’s not like you work for the former. Use some of the savings to pay down your mortgage more quickly instead if you’re that bothered.

What do you mean by asserting that you don't work for savings?
Unless you have been gifted an amount of money, then you have worked for the money and paid tax on what you have earned

Taxing savings is a second tax, effectively prnalising good personal housekeeping, frugality and ambition.

But please do let HMRC know that you are happy personally, to pay more tax

[AreOttersJustWetCats]

@follyfoot37

What do you mean by asserting that you don't work for savings?
Unless you have been gifted an amount of money, then you have worked for the money and paid tax on what you have earned

Taxing savings is a second tax, effectively prnalising good personal housekeeping, frugality and ambition.

But please do let HMRC know that you are happy personally, to pay more tax

Savings aren't taxed.

Interest is taxed. And people don't work for interest.

[Morph22010]

@MrsFrugal

There's always one!
I can be bothered to move it and I will it just seems a ridiculous waste of HMRC's time and resources to potentially sort out additional tax on something like 125 quid! Hardly rich with 35k, saved for a long time, refuse to borrow and certainly not famous 😂

There used to be tax on all interest. The changing it to just being amounts over £500/£1000 that are taxable was a simplification to safe hmrc having to collect small amounts of interest, there will always be someone just over the limit whatever they changed it too