income tax on savings if claiming DLA and Incapacity?

crumpetman

Had a search around and am still not sure about this. If your source of income is DLA and Incapacity Benefit then can you register for gross interest with banks?

It looks like DLA is non taxable but Incapacity is but it is well under the income tax personal allowance of £10k per year.

TIA.

markmarkmark

DLA is not taxable, and IB is not taxable if you were on it before 2001 if my memory is correct. Then it became taxable. There should only be a relatively few people on IB not migrated to ESA by now, those very near to retirement age etc, depends on the backlog I suppose.


If you gross savings for the tax year is less than the difference between gross IB and tax allowance, then you should not pay tax on it. After April you have £5000 tax free from gross savings anyway if any earnings (also IB or ESA) do not reach the tax allowance of £10600.

crumpetman

Thanks for the info, I didn't even know about the £5k tax free from savings!

I will check the paperwork regarding IB and ESA, it's not for me so I might not yet have seen the latest of the letters regarding the situation.