Savings Interest

[Deleted User]

I was reading on the Gov website that you can get all your interest tax-free (if your taxable income is less than £15,600).

I'm finding this difficult to understand. If the personal allowance is £10600, why are you then able to earn an extra £5000 tax free. I thought that you would start paying tax once your income exceeds our personal allowance.

I can't get my head round this - can someone please explain

CLAPTON

[quote=[Deleted User];discussion/5237566]I was reading on the Gov website that you can get all your interest tax-free (if your taxable income is less than £15,600).

I'm finding this difficult to understand. If the personal allowance is £10600, why are you then able to earn an extra £5000 tax free. I thought that you would start paying tax once your income exceeds our personal allowance.

I can't get my head round this - can someone please explain[/QUOTE]

it is because there is special rate for saving interest of 5000 at zero percentage

however if only applies if your total income is less than 15,600

alanq

[quote=[Deleted User];discussion/5237566]I thought that you would start paying tax once your income exceeds our personal allowance.
[/QUOTE]

You would start paying tax if your EARNINGS exceed your personal allowance.

Does the following MSE article make it any clearer?
http://www.moneysavingexpert.com/savings/tax-free-savings

[Deleted User]

alanq wrote: »

You would start paying tax if your EARNINGS exceed your personal allowance.

Does the following MSE article make it any clearer?
http://www.moneysavingexpert.com/savings/tax-free-savings

Thank you for your kind reply. The MSE article explains it very well. I now have a better understanding of it. The link to the HMRC calculator is also very helpful.