Tax saving on savings

campins

Is there any way I can save tax on my online saving account interest?

Milarky

If you are a 'taxpayer' (i.e will have income this year of at least the personal allowance from all sources) you are meant to leave savings accounts to be taxed - and only recover any overpayment after the tax has ended.

That said, there are two ways you might be able to increase the gross income (and thereby pay more tax - but still have more net also) from savings:

If the account offers monthly or annual interest, tick the annual option. The annual rate will either be slightly higher anyway [eg '6.80AER annual' vs '6.75AER monthly'] or, if not, the effect of having the same gross compound rate ('AER') paid less often is to reduce the impact of the tax

Here's an example of that:

£1000 @ 6.50AER, 20% tax
annual gross £65, tax £13, net £52
monthly [6.31% 'gross' = '6.50AER'] gross £64.58, tax £12.92, net £51.66

Not much (but you did ask!)

Another possibilty is if you can defer receiving income on savings to a year when you know your circumstances mean you either won't be receiving your full allowance or won't be taxed as highly as at present. Some banks do make this available - but you'd have to ask them about this.

Husbands and wives often split savings - or even out more in the wife's name where this makes better use of the tax allowance. Typically one is a 40% taxpayer and the other isn't