if you open a savings account. do you pay tax on the interest earned? or the actual sum of money?

Answer 1

It depends on the account as to whether you pay tax or not.

If you have an Individual Savings Account (ISA), you won't pay tax. Any other UK based account, you will have to pay tax on any interest earned.

For more info on ISAs, this link is useful --> http://www.moneytowers.com/2006/savings-investments/isa/
For more info on general savings accounts, this link is useful --> http://www.moneytowers.com/2006/savings-investments/savings-accounts/

Answer 2

You only pay tax on the income, that is the interest element. The capital they generously let you keep. Most savings accounts automatically deduct the interest so you don't need to pay any more. If you are not a tax payer you can apply to have the interest paid gross. It should show on your statement of interest if they have deducted the tax.

Answer 3

Only the interest. If the money was earned income, you have already paid the taxes on it or you will. The actual sum of money is not reported to anyone.

Answer 4

Hi, you would only pay tax on income. In this case interest is the income. Your bank will automatically deduct the tax from your interest, unless it is a ISA, where you are allowed to deposit up to £3000 each tax year and receive your interest gross. For all other saving products, if your total annual income will be less than £5035 (your personal allowance) for 06/07 you can receive your interest gross by filling in a R85 HMRC form, available from you bank. This will ensure you receive your interest without tax deducted.
Hope this helps

Answer 5

Only the interest if you are a tax payer. If you don't pay tax, i.e not working or retired then you can get the interest paid in full to you and pay no tax. Just ask for a form from your savings provider.

Answer 6

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Answer 7

Only on the interest. Unless it is a tax free account, or you aren't a taxapayer (i.e. at school/university) where you can make a tax declaration so you get interest paid gross - I think it is a form R85.

Answer 8

I would guess interest earned. You only have to account for the actual some of money.

Answer 9

no, the interest earned. the money was already taxed when you earned it..the interest is treated as income.

Answer 10

Only on the interest which is usually deducted at source