tax bands and interest on savings

rinkydinkpanther

Apologies if this is a stupid question, I can't seem to find the answer anywhere.

I've been playing around with savings calculators, and most of them require you to indicate whether you are a basic or higher rate tax payer to do their calculations.

Now, I am not a higher rate tax payer - I currently earn £250 a year under the current threshold for paying tax at 40%. Does this however mean that if I was earning interest of more than £250 a year in non-ISA accounts, that I would have to pay 40% tax on any interest that took me over the limit ?

I also pay 6.2% of my salary into my pension on a salary sacrifice scheme, so I'm not paying tax on that part of my salary, so I suppose I am effectively nearer £3k under the annual threshold for 40% tax. Does this mean I could earn up to £3k interest before being charged at 40% ?

jem16

rinkydinkpanther wrote: »

Now, I am not a higher rate tax payer - I currently earn £250 a year under the current threshold for paying tax at 40%. Does this however mean that if I was earning interest of more than £250 a year in non-ISA accounts, that I would have to pay 40% tax on any interest that took me over the limit ?

Yes it does.

I also pay 6.2% of my salary into my pension on a salary sacrifice scheme, so I'm not paying tax on that part of my salary, so I suppose I am effectively nearer £3k under the annual threshold for 40% tax. Does this mean I could earn up to £3k interest before being charged at 40% ?

Yes it does.

rinkydinkpanther

Ah, thank you very much.