Tembo’s Post

💡 Understanding Tax on Savings Interest 💡   Rising interest rates are great for savers, but did you know you might need to pay tax on the interest earned? 💰   With allowances such as the Personal Savings Allowance and the starting rate for savings, it's important to stay informed to avoid any unexpected tax bills. Whether you're employed, receiving a pension, or completing a self-assessment tax return, knowing these details can make a significant difference.   In our latest article 'Explained: When Do You Need To Declare The Interest Earned On Savings?' we shed light on this topic, providing valuable insights into when and how you need to declare this interest to HMRC.   Don’t miss out on our weekly posts here on LinkedIn, where we share a selection of articles from our blog series. You can find all this month’s articles on our website, or if you want to receive our articles as soon as they’re published, subscribe to our monthly newsletter by sending an email to info@bespokeifa.co.uk. We’d love to hear your thoughts in the comments!   #TaxTips #Savings #PersonalFinance #InvestSmart #NewArticles #BespokeBlogSeries https://lnkd.in/egXSaU79

With the current state of interest rates, it is good to have an understanding on what to do going forwards when it comes to interest earned on your savings and the tax implications that may be involved 💡📝

💰I did a review with clients yesterday. In addition to the longer term investments I look after for them, they have a large savings account balance earmarked for something which will happen in 1 - 2 years time. In the meantime, they’re earning way more interest now than they have in the past. 🏦 Last time savings rates were this high, savings interest was taxed at source at basic rate, and non taxpayers registered with their bank or building society to have their interest paid gross. 💡 These days, savings interest is paid with no tax deducted for everyone. So what does that mean for savers who owe tax on their savings? 😫 If you earn £10,000 or more, you need to complete a self assessment tax return. Everything else my clients have is tax free or taxed at source. But they will have to do tax returns now to declare and pay tax on their savings income. 🥳 If you’ve already sheltered your investments from tax by wrapping them in an ISA wrapper, don’t forget about your cash savings. Another great reason to use your ISA allowance to take your returns out of the tax system. £20k per person allowance per tax year. This year’s allowance expires on 5th April. Use it or lose it. #taxplanning #savings #selfassessment #sjpwealth https://lnkd.in/edGt62RR.

We will see a huge spike in the number of people paying tax on savings in 2024. This article explains how much tax you could pay and what you can do to reduce your HMRC bill.

We will see a huge spike in the number of people paying tax on savings in 2024. This article explains how much tax you could pay and what you can do to reduce your HMRC bill.

"The IRS says the campaign is focused on taxpayers with more than $1 million in income and more than $250,000 in recognized tax debt." How much of the "targeted" audit of the affluent dampens the ability for first generation wealth builders to preserve and grow the wealth? In the past week, I have reviewed assets of successful professionals with incomes of well over a $1 million a year and the descendants of weath pioneering families where their reported income barely crossed $100,000 for the year. The biggest difference between them is that the latter has a series of trusts, businesses, amd various entities that indirectly belong to them but as far as income is concerned, their great-great-great- grandparents' tax planning ensured little if any would be attributed to these descendants directly. Is the income truly a red flag? What about the $250,000 recognized tax debt? Is that a fair audit trigger? Take a first-generation professional, X, who starts a business primarily to kickstart a path to intergenerational wealth. Without a financial strategy or consulting with a tax attorney, this individual empties a significant retirement account for the business. X files an income tax return jointly with spouse Y and they have an income of over $1 million. X fails to pay the additional tax and penalty which exceeds $250,000 from the withdrawal of the retirement funds and limited business income. They do not have significant savings and have not seen dramatic growth in their wealth. X would have to shut down the business if they had to clear the debt. Their return is flagged for audit. Consider now that the wealthy descendant has a sizeable indirect interest in a series of entities and trusts where structuring has made it so the family borrows from one entity which could even make it insolvent and that entity just so happens to owe over $250,000 in tax debt. The tax debt is owed by an entity not an individual. That IRS campaign states it targets individuals. The descendant's tax return only has an income of $100,000 and no tax debt. That return is not flagged for audit. Targeting for tax audits based on an illusion of criteria rarely has the impact sounded in headlines. Both compliance and wealth preservation can be achieved with sound tax strategy but first-generation wealth rarely has access to the full breadth of this information or advisors. Sure, no one should be side-stepping tax obligations but is it fair to set criteria that targets the newly wealthy more?

We will see a huge spike in the number of people paying tax on savings in 2024. This article explains how much tax you could pay and what you can do to reduce your HMRC bill.

With the ISA window rapidly closing for this tax year, our Savings Director Derek Sprawling talked to The Money Pages about what savers should consider when looking to protect their money from tax. Our research shows that the number of non-ISA savings accounts that could potentially generate enough interest to incur tax has tripled, so savers need to be aware of the steps they can take to shield their returns. https://lnkd.in/eb_dqsUY #ISA #savings

🚨 UK Savers Alert: Stealth Tax Bills on the Rise 🚨 Do you know what a stealth tax is? Well, you should because if you are reading this you are probably being stealth taxed as we speak! The definition of a Stealth Tax is "a form of taxation levied in a covert or indirect manner" I was reading an article on the Telegraph this morning and the figures are just crazy. Non paywall version of the Telegraph article below: https://lnkd.in/gksUFVNd 🔹Key Facts: - Six million savings accounts are now at risk of triggering tax bills this year, up from three million last year. - Basic rate taxpayers can earn £1,000 of interest annually on savings before paying tax, but frozen thresholds and high interest rates are pushing many over this limit. -Since April, record numbers of savers will pay tax on their interest for the first time. -Income tax thresholds have been frozen since 2020-21, remaining so until 2027-28, dragging millions into higher tax brackets. This year, an additional one million taxpayers will pay tax on savings interest. The Government estimates that 1.4 million basic rate taxpayers, 842,000 higher rate taxpayers, and 452,000 additional rate taxpayers will pay tax on their savings interest this tax year. 💼 Impact on Your Savings: - Basic rate taxpayers can earn £1,000 tax-free, higher rate payers £500, and additional rate taxpayers get no allowance. - Higher rate taxpayers will see their tax-free limit cut in half, paying 40% tax on savings interest instead of 20%. - With easy-access savings account interest rates around 5%, having just £20,000 in savings can push a basic rate taxpayer over the limit, while £10,000 does the same for higher rate taxpayers. The good news is that good Financial Planning can help you to organise your finances tax-efficiently. So if, after reading this, you think you will be affected by the stealth taxes, drop me a message to talk about how I could help #FinancialPlanning #WealthManagement #TaxEfficiency #Savings #UKFinance #StealthTax #RetirementPlanning