is interest on borrowed money subject to income tax?

Question

as a 70 yr disabled pensioner i raised a mortgage on my property to purchase a retirement home.While searching i put the money in a saveings account which the interest on same helped towards paying the repayments,some time later i found and purchased my retirement home with the mortgage monies. Is the interest i received dureing the search period counted as income and liable to income tax.

Answer 1

if you sold your original property and now just have the retirement home all the money from the sale is not taxable but all interest income is taxable

Answer 2

Interest is usually deducted at source, when you look at the interest rates offered they give you a gross and a net (after tax) . Further tax would only be applicable if your total earnings as a pensioner exceeded a certain level.
In fact if you do not have investments and rely on a fairly low pension you can get a form to claim tax back deducted from your interest.

Go to where ever you invested the money they should have a financial adviser who can help. If you are unsure there you could try help the aged or the citizens advice bureau.

As a straight answer it can be if you 'earn' enough and fall into the category of a higher rate tax payer as a result of all income form employment, investments, or other taxable income streams (eg if you collect rent from a lodger etc).

Answer 3

Of course, any income made by individuals, groups and corporate bodies is subject to taxation, except the tax policy of your country stipulates otherwise. I think your interest accrued as a result of saving your money for a stated period of time is an income. However, the question of whether or not it is subject to tax depends on whether it is a taxable or non taxable income. But in my opinion, it is subject to tax. I hope my answer is straight to the point. thanks

Answer 4

If your income in the tax year was more than £7280 including the interest, then yes it is taxable. However, savings rate tax would normally have been deducted, so unless you're a higher rate taxpayer there is no further liability.

Answer 5

The interest you earned is counted as earnings so you may be taxed. Usually the bank will pay interest net meaning they have paid the tax for you. If the amount is below the threshold for earnings for the year you should be able to claim this back.