R07, R06, AF5 and the Personal Savings Allowance
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Posted May 11, 2016
This update covers: 1. R07 Advanced mortgage advice - Gap Analysis and Assessment Tool 1. R07 Advanced mortgage advice - Gap Analysis and Assessment Tool There are 2 parts to this package, 16 case studies each comprising 5 multiple-choice questions AND a bank of 220 multiple-choice questions.
Revision style allows you to view the answer after every question. With the exam style you complete all the questions in the same manner as you do in the actual exam. Both styles include all these features:
2. Expected solution packages for R06 and AF5 - start preparing now The Expected Solution Packages offers MORE than any other training provider:
It’s a no brainer! See our expected solution packages page here for more details. 3. Tax free interest - the Personal Savings Allowance Tax free interest - the Personal Savings Allowance The next time a bank, building society, NS&I or other deposit-taker adds interest to a deposit account, it will be without the deduction of basic rate tax. Some NS&I products already paid interest gross prior to the change, but now they will be able to do the same with the rest of their products. Under the new rules, interest is still taxable in full for those in the additional rate (45%) income tax bracket - they do not get a PSA at all. Those that are in the higher rate (40%) bracket can earn up to £500 per year interest tax free, and those who pay basic rate tax (20%) can earn up to £1,000 per year tax free. Any interest received over these amounts is taxed and collected either through self-assessment or by HMRC collecting it through tax coding. The taxpayer doesn’t have to do anything - the coding will be done by HMRC via the bank or building society, and those already in self-assessment carry on as usual. Savings income as defined under income tax legislation includes income received from deposit and savings accounts as mentioned already, but also includes interest distributions from authorised unit trusts and OEICs, gilts and corporate bonds, the income from purchased life annuities and gains from ‘certain contracts for life insurance’. It is interesting that this includes offshore bonds but NOT onshore bonds. It is important to remember that the 0% starting rate still applies in some circumstances, and of course we still have ISAs of numerous types which are tax free. Neither of these use up any part of the PSA but income that is within the PSA does count towards the basic and higher rate limits. Example The point at which an individual pays higher rate tax for 2016/17 is when earnings exceed £43,000. So an individual with income of up to £43,000 is taxed at basic rate, and is entitled to £1,000 PSA. However, once the figure exceeds £43,000 (i.e. those with income £43,001 - £150,000), the PSA reduces to £500. The interest is added to earnings to establish this. Going back to our example: If Joe has earnings of £42,000 plus interest of £999 he is a basic rate taxpayer (as all income received falls within £43,000). He will receive a PSA of £1,000, and all his interest is tax free. However, if he earns £42,000 plus interest of £1,005, this pushes him into the higher rate tax bracket by £5. He will only get a £500 PSA, leaving the other £500 of interest taxed at 20% and the £5 taxed at 40%!
Wizard Learning Ltd Provider of accredited online training and CPD system for financial advisers and financial services professionals. We are committed to helping you gain higher level qualifications and maintain this knowledge through effective continuous professional development. |
