silly q, interest on big savings??

bernsteingirl

really silly question, sorry. My mum (65) gets about 12000pa in total of what she says is tax-free income (from ex-husband, pension and Disability).

she recently sold her house and now has 70000 in savings. does she have to pay tax on the interest?

we are trying to work out whether we were stupid to put some in an ISA?!

LittleVoice

bernsteingirl wrote: »

really silly question, sorry. My mum (65) gets about 12000pa in total of what she says is tax-free income (from ex-husband, pension and Disability).

she recently sold her house and now has 70000 in savings. does she have to pay tax on the interest?

we are trying to work out whether we were stupid to put some in an ISA?!

£12,000 is more than the tax-free personal allowance. However, money from an ex- and disability payments I believe are not taxable.

If the pension is her pension (eg state pension and any from employment), that is taxable. The personal allowance was £8,105 in the tax year just ended. So if those taxable payments and interest received in the tax year exceeded £8,105 tax was due.

If she was born before 6 April 1948, this year her personal allowance is £10,500. If the taxable pension together with interest (other than in an ISA) is going to come to more than that, then tax will be due on the excess.

So if you put money in an ISA, that will be out of the calculation.