Uptowngirl Posted January 8, 2013 Author Share Posted January 8, 2013 So if I got a lower than inflation pay rise I shouldn't be taxed on it? Good point. Thank you. The tax threshold goes up each year by the rate of inflation so if you have a pay rise which is less than inflation you pay less tax each year. Good point well made. Link to comment Share on other sites More sharing options...
maxmaximus Posted January 8, 2013 Share Posted January 8, 2013 No,your savings aren't taxed at all...it's the income from them that is..could you answer the question I asked..would it be fair for me to pay no tax if all my income came from the interest on my savings..? I would only define the interest that exceeded inflation as earning, so if you are only getting 3% I would say it would be fare not to pay tax on it. Most people saving are losing money and not earning money so the government shouldn't tax it. ---------- Post added 08-01-2013 at 16:18 ---------- Yes it would. If at the end of a year you end up with less in real terms than you started with it does seem a bit perverse to be taxed on that inflationary element. If you had your life savings on deposit and earned 2% interest whilst inflation was 4% you are loosing money not gaining it. For many people this is the money that they have to survive on for the rest of their life. (as in your question) To my idea a fair system would be to index savings. So you pay tax on income above inflation, provided that income is over the tax threshold. I agree Link to comment Share on other sites More sharing options...
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