Using full savings allowance

moneysavingmarko

Hi all,

I am a higher earner and my wife is a lower earner.

Her non-savings taxable income this year is 8072 so falls within the person allowance.
She is therefore eligible for 5k starting rate for savings and 1k personal savings allowance.

Her savings income is around 17k (from 12% P2P lending in her name)

If she pays the net amount of £8072 into her SIPP does that mean she has no tax to pay on her savings income. Personal allowance 11k + 5k starting rate + 1k PSA?

Dazed_and_confused

No.

On those income figures the sipp will have no impact on her income tax liability.

The sipp will attract basic rate tax relief at source, bumping up the amount in her sipp fund, but doesn't alter the fact that she has £8072 taxable non savings income.

In rounds sums I would estimate her tax liability to be £1600 (assuming your reference to "this year" means this current tax year)

25000 total income less PA 11000 = 14000 to pay tax on.

5000 x 0% (savings rate band)
1000 x 0% (PSA rate band)
8000 x 20%

moneysavingmarko

thanks dazed, makes sense