zlb
Member of DD Central
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Post by zlb on Jan 10, 2024 11:08:37 GMT
If there's income below the individual's tax threshold, but more than the £5k permitted by the starting rate for savings, can that person say that the savings income is sole trader income? Does anyone know. I've tried looking online but can't get through all of the results about the starting rate for savings, which I already know about. So can any person off the street register as a sole trader business type is savings accounts and investments?
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Post by bracknellboy on Jan 10, 2024 11:27:08 GMT
If there's income below the individual's tax threshold, but more than the £5k permitted by the starting rate for savings, can that person say that the savings income is sole trader income? Does anyone know. I've tried looking online but can't get through all of the results about the starting rate for savings, which I already know about. So can any person off the street register as a sole trader business type is savings accounts and investments? I am probably misunderstanding what it is you are asking, not least because looking through my lens what you are asking/saying seems confused. Hence I'm probably missing the point. >>If there's income below the individual's tax threshold, but more than the £5k permitted by the starting rate for savings I don't know what you mean by this. The £5k is the starting rate allowance, not income threshold. The threshold for being eligible is two fold: income below your personal tax allowance (lets assume that is £12, 570 for the moment) then you are eligible for the whole of the starting rate allowance (£5k). Above that 'other income' level, you lose it £ for £ so that once your other income hits £17,570 (£12,570 + £5k) you have none of the starting rate allowance left. Savings income is savings income, not sole trader income. The guidance is very clear about 'savings income' and 'other income'. But the point of that being so is because it is potentially eligible for the additional savings allowances. I'm not sure what you are trying to achieve by 'reclassifying' it. Savings income above the allowance, for tax purposes, then gets treated as any other income. Example: I have £5k of 'other income' (say as a sole trader). I have £30k of savings income (interest rates are high). I can get a total of £5k savings starting rate allowance against the £30k savings income. In addition, as I'm below the clip level to lose the normal savings allowance of £1k I get an additional £1k. At this point, my income which is liable for tax is now a total of £29k: £5k + (£30-5-1)). But I still have my personal allowance of £12.75k, so I'm now taxed on £16.25k (assuming I did the maths right in my head). So perhaps the answer to your question, now I've worked that through and might see where you are coming from, is that any savings above the total savings allowances you are eligible for automatically benefit from any residual personal income tax allowance.
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zlb
Member of DD Central
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Post by zlb on Jan 10, 2024 11:35:53 GMT
If there's income below the individual's tax threshold, but more than the £5k permitted by the starting rate for savings, can that person say that the savings income is sole trader income? Does anyone know. I've tried looking online but can't get through all of the results about the starting rate for savings, which I already know about. So can any person off the street register as a sole trader business type is savings accounts and investments? I am probably misunderstanding what it is you are asking, not least because looking through my lens what you are asking/saying seems confused. Hence I'm probably missing the point. >>If there's income below the individual's tax threshold, but more than the £5k permitted by the starting rate for savings I don't know what you mean by this. The £5k is the starting rate allowance, not income threshold. The threshold for being eligible is two fold: income below your personal tax allowance (lets assume that is £12, 570 for the moment) then you are eligible for the whole of the starting rate allowance (£5k). Above that 'other income' level, you lose it £ for £ so that once your other income hits £17,570 (£12,570 + £5k) you have none of the starting rate allowance left. Savings income is savings income, not sole trader income. The guidance is very clear about 'savings income' and 'other income'. But the point of that being so is because it is potentially eligible for the additional savings allowances. I'm not sure what you are trying to achieve by 'reclassifying' it. Savings income above the allowance, for tax purposes, then gets treated as any other income. Example: I have £5k of 'other income' (say as a sole trader). I have £30k of savings income (interest rates are high). I can get a total of £5k savings starting rate allowance against the £30k savings income. In addition, as I'm below the clip level to lose the normal savings allowance of £1k I get an additional £1k. At this point, my income which is liable for tax is now a total of £29k: £5k + (£30-5-1)). But I still have my personal allowance of £12.75k, so I'm now taxed on £16.25k (assuming I did the maths right in my head). So perhaps the answer to your question, now I've worked that through and might see where you are coming from, is that any savings above the total savings allowances you are eligible for automatically benefit from any residual personal income tax allowance. Yes, thanks, your last sentence answers the question. In order to automatically benefit from any residual personal income tax allowance I wondered whether I had to register as a business, but you say it's automatically counted up to the allowance threshold. So if I earned £2k as sole trader, and £10k on savings income I don't need to do anything administratively other than declare it. Thanks
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keitha
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2024, hopefully the year I get out of P2P
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Post by keitha on Jan 10, 2024 13:04:39 GMT
and if under 66 and not working pay voluntary NI £166 a year gets you £4 a week in extra pension if you are short of a full state pension.
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zlb
Member of DD Central
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Post by zlb on Jan 21, 2024 14:33:35 GMT
and if under 66 and not working pay voluntary NI £166 a year gets you £4 a week in extra pension if you are sort of a full state pension. Yes, done that thanks.
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