Personal Savings Allowance guide

bowlhead99

Yes, the £5k starting rate for savings sits on top of your general allowances- which are *usually* a nice straightforward £11k but could be increased by a bit if you're blind or in an older married couple; and if you're a younger couple that choose to deliberately shift some of the personal allowance between you from one to the other, will definitely *not* just be the basic £11k each, because of the transfer in or out.

Consumerist

Brilliant discussion. Some clarity emerging, at last.

Thanks everybody.

polymaff

teddysmum wrote: »

I had to ring HMRC today and actually spoke to someone confident about the £5000 savings interest allowance, in the case where someone has taken on their spouse's 10% .


As hoped,she confirmed that(ignoring the new £1000 allowance) the £5000 savings interest allowance is on top of the £12100 and not the original £11000 ,so eg someone with £14100 earned income still has £3000 or savings interest allowance left.(The last person I spoke to didn't know).

Wouldn't be the first time HMRC confidently give the wrong answer. I've received a lot of wrong advice from them over the years - particularly recently over my state pension where they have quoted five different figures that should replace the patently wrong figures they've pre-populated my 2015/16 return with.

We'll have to wait a year before we can test the advice with respect to the 2016/17 figures you quote - but I'm already aware of a 2015/16 assessment where they are applying the rule in accord with my comments.

Consumerist

polymaff wrote: »

. . . We'll have to wait a year before we can test the advice with respect to the 2016/17 figures you quote - but I'm already aware of a 2015/16 assessment where they are applying the rule in accord with my comments.

I regret that you are quite right about the reliability of information provided by HMRC's call centres.

In truth, I think HMRC are making it up as they go along while we are supposed to plan our tax affairs in the dark.

grey_gym_sock

Consumerist wrote: »

:exclamati Warning: In the kingdom of the blind, the one-eyed man is king. :exclamati

typical sex discrimination

and of course, the one-eyed person doesn't have a higher personal allowance.

Consumerist

grey_gym_sock wrote: »

typical sex discrimination

But the one-eyed woman would be queen, of course.

xylophone

https://www.gov.uk/hmrc-internal-manuals/savings-and-investment-manual/saim1112

The above is the calculation from HMRC for 2015-16.

"Where an individual’s non-savings income is less than the starting rate for savings limit, the savings income will be taxable at the 0% starting rate for savings up to the limit. From 6 April 2015 the starting rate for savings limit is the individual’s personal allowances plus the starting rate band of £5,000.

Then https://www.gov.uk/income-tax-rates

"The standard Personal Allowance is £11,000, which is the amount of income you don’t have to pay tax on.

Your Personal Allowance may be bigger if you claim Marriage Allowance....."

Therefore it seems to me that the calculation for 2016-17 would be as here (using the figures appropriate to the individual)

https://forums.moneysavingexpert.com/discussion/comment/70470142#Comment_70470142
Post 7

At "Less PA" the PA figure for the person with standard personal allowance plus marriage allowance would be £12100.

This would also accord with Post 16 https://forums.moneysavingexpert.com/discussion/comment/70597736#Comment_70597736

"My tax code is 1210 giving me the full tax free allowance of 12100, with no tax to pay on my savings interest at all. This means they have used the higher figure of 18100."

Consumerist

xylophone wrote: »

. . . Your Personal Allowance may be bigger if you claim Marriage Allowance.....

Nice one xylophone.

I think that pretty well spells it out. It certainly seems clear enough to me.

Thanks.

polymaff

xylophone wrote: »

Then https://www.gov.uk/income-tax-rates

"Your Personal Allowance may be bigger if you claim Marriage Allowance....."

I cannot see how this is compatible with HMRC's own definitions of how they intend to process 2015/16 Income Tax Returns.

xylophone wrote: »

Therefore it seems to me that the calculation for 2016-17 would be as here (using the figures appropriate to the individual)

As I've written, it'll be a while before we can draw any firm conclusions about 2016/17. Let's wait and see.

polymaff

polymaff wrote: »

Originally Posted by Consumerist
"By extension to that principle, does that also mean that the Marriage Allowance donor would still be able to earn the full £17k of taxable income without paying tax even though they had transferred £1.1k of their PA to their spouse?"

As MAT only affects the calculation phase, I'd guess that the assessment phase would be done on the basis of £11k PA, £5k SRA and £1k SPA. Then if there was a non-zero liability it would be bumped up by 20% of the MAT. Hmm - but what about the zero-liability case?

Interesting question ... in this era of so-called Tax Simplification.

I've looked further into this, Consumerist. It appears that the donor does have his/her PA reduced by the amount transferred. There is then a test to see if this pushes him/her into higher rate taxation - in which case the transfer is cancelled.