As experts in the field of wealth management in Lancaster it is essential to remain on top of new government legislation in order to not only keep on top of the ever-advancing world of finance but also to keep you, our valued clients, informed. As part of the government’s savings revolution several leading accountants and fellow savings experts are predicting that thousands of pensioners could face fines as they are made to fill out tax returns for the first time.
As of April 2016 anyone with savings over £1,000, for a basic rate taxpayer, or £500, for a higher rate taxpayer, will be legally obliged to declare the interest earned from their savings to the government. As such, it is forecasted that thousands of pensioners, including those with relatively modest savings, will be unsuspectingly breaking the law. Through this inadvertent illegal activity the unsuspecting pensioners could face fines or even worse, prosecution, as it will be considered that they failed to declare their income accurately.
Seemingly, this is going to require a large communications exercise in order to provide pensioners with fair warning as many of them have never needed to file a tax return and thus wouldn’t even consider it, even under new government legislation.
Range of Options Available
George Osborne announced plans earlier in the year that would enable around 17 million citizens to halt paying tax on their savings, whilst more recently HMRC stated that whilst it is looking at a “range of options” for savers to make it simpler for them to announce their income, these “definitely won’t include tax returns…that is not going to happen.” This is certainly encouraging given the notion that innocent pensioners could lose out on their hard-earned money through genuine lack of awareness.
Presently, 20% income tax is deducted from interest that is paid on non-ISA savings however, as of April next year, this interest will be paid straight into the individual’s account with no deductions being made. As such, this means that around 830,000 taxpayers may indeed be required to declare the interest on their savings for the 2016/17 financial year but will have it automatically deducted by the taxman from 2017, thus savers will not need to declare it.
At the foot of such a blog it is of course worth noting that the Financial Conduct Authority does not regulate taxation advice. However, if you’re a sensible and stringent saver it will pay to keep your eyes peeled for any further information as the last thing you want or deserve is to get stung in the pocket, particularly after you’ve put in the hard work of earning those precious pennies and pounds.
Alternatively, if you are at all concerned and would like to seek further financial advice, please don’t hesitate to contact us on 01524 416872 where you can speak to one of our friendly financial experts. Alternatively you may book an appointment for a no-obligation consultation at either of our Lancaster or Morecambe offices where you can discuss your financial concerns with one of our knowledgeable finance specialists.