Personal savings allowance when unemployed?
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chi2000
Posts: 10 Forumite
Hi all,
Can anybody confirm what the maximum amount of savings interest an unemployed person can earn before paying tax?
Is it the same £1000 like an employed person or are they able to earn more tax free interest on savings if it's there only source of income?
Hope that makes sense.
Thanks.
Can anybody confirm what the maximum amount of savings interest an unemployed person can earn before paying tax?
Is it the same £1000 like an employed person or are they able to earn more tax free interest on savings if it's there only source of income?
Hope that makes sense.
Thanks.
0
Comments
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£17500, plus any ISA interest, less any other income, such as benefits, pensions, casual earnings.
This is made up of
£11500 Personal Allowance,
£_5000 Starting Rate for Savings, and
£_1000 Personal Savings Allowance.Eco Miser
Saving money for well over half a century0 -
Being employed or unemployed really makes no difference, all that matters is the amount of income.
Chances are most unemployed won't be able to benefit from the Personal Savings Allowance simply because they have insufficient income to be able to use it.
As Eco Miser says you have the Personal Allowance first then the starter rate for savings income (which is 0% tax rate) so the Personal Savings Allowance (another 0% tax rate, not actually an "allowance") only applies if you have income over £16500 in the current tax year.0 -
Thank you both for replying.
So just as an example if an a person has 1 million pound in a savings account and get an interest rate of 1.4% they would earn £14,000 in interest and not pay any tax. Would this be correct?0 -
It is exactly correct.0
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Thank you both for replying.
So just as an example if an a person has 1 million pound in a savings account and get an interest rate of 1.4% they would earn £14,000 in interest and not pay any tax. Would this be correct?
And beware the tax trap between £17.5k and £22.5K where you probably pay 40% tax, effective.
And currently effectively losing £35k pa to inflation.0 -
And beware the tax trap between £17.5k and £22.5K where you probably pay 40% tax, effective.
well, that doesn't happen if all your income is interest.
only if you have something like:
£11.5k salary + £6k interest; on which, no income tax is due.
and then your salary goes up by £5k; now, £2k income tax is due, which is an effective rate of 40%.0
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