10% tax rate on savings

hstudent

Can anyone explain in simple terms who's eligible for the 10% tax rate on Savings interest. All websites seem to use complex jargon or give an example of someone who would get the 10% rate, but no indication of upper limits for getting it.

Lokolo

If you pay tax on savings only. i.e. you earn over £6035 from savings interest (no other sources of income). Its only on the first £2000 I think.

Hungerdunger

Lokolo wrote: »

If you pay tax on savings only. i.e. you earn over £6035 from savings interest (no other sources of income). Its only on the first £2000 I think.

It's actually £2320.

Here is an easy-to-follow example from HMRC for someone whose only taxable income is savings interest.

jem16

First £6035 is tax-free. It doesn't matter whether this is earned income or savings income.

Next £2320 is at 10% but only for savings interest.

So if you earned £6035 and all the rest of your income was interest from savings you would get the whole of that £2320 at 10%. If you earned over £6035 but under £8355 and had savings income you would get part of that £2320 at 10% (i.e. earned income £7000 - you would get £1355 of your savings interest at 10%)