£5k starting rate for savings

ANGLICANPAT

I know the £1000 personal savings allowance applied in tax yr 16-17, because HMRC applied it to my assessment, but what is the first tax yr that the £5000 savings starting allowance comes in, meaning you dont pay any tax on savings if your total taxable income is below £17,000 as I dont seem to have benefited from that .

Eco_Miser

The starting rate for savings was 10% on £2k+ from 2007 to 2015, then 0% on £5000 from 2015-6 onwards.

Dazed_and_confused

Not everyone who can benefit from the Personal Savings Allowance can also benefit from the savings starter rate.

And some who can benefit from the savings starter rate won't be able to get the Personal Savings Allowance.

Plenty will get one of the other but not many will get both.

Malthusian

It was introduced in 2015/16.

Dazed_and_confused

The starter rate has been around a long time before 2015/16

kidmugsy

Dazed_and_confused wrote: »

The starter rate has been around a long time before 2015/16

Yes, it stemmed from an uncharacteristic muddle by Gordon Brown, didn't it?

teddysmum

How much relief you get depends on how much your income (not from savings) is over the personal allowance level. Ignoring the £1000,the income needs to be below £16000 and if you earn £15000 (excluding savings),it only leaves £1000 of interest with no tax to pay (out of the original £5000).

ANGLICANPAT

Thank you , I cant find an HMRC page which explains where the £17k comes from and how the £5k savings starting rate is reduced, ( a link would be much appreciated) but Im sure Ive read somewhere, that if your total non savings income is less £11k for 16/17 , then any savings income added to that which takes you over the 11k + £1k personal allowance for basic rate tp, will , reduce your £5000 zero rate allowance for for savings by £ for every £ over £12k . Is that correct ?

capital0ne

Everyone on standard tax rate or below (i.e. Zero) gets £1,000 tax free interest. Depending how much you earn you could get £1,000 + £5,000 + £11,000 = £17,000 tax free in the 16/17 tax period, and now of course £17.5k tax free.

Don't go over complicating things, just apply the rules.

xylophone

a link would be much appreciated)

https://www.litrg.org.uk/tax-guides/other-tax-issues/savings-and-tax

http://www.taxvol.org.uk/download/HMRCs-guide-to-the-Personal-Savings-Allowance.pdf

ANGLICANPAT

Thanks everyone. ( and thank you xylophone for those helpful links)
I have applied the rules as I understand them in post 8 and I think HMRC has overcharged me . ( My savings income was £1964)
From my their assessment letter to me.

Total Income received £12,375
Minus personal allowance of £11,000
Total income on which tax is due £1375
Savings interest from banks ,bsoc, securities etc
Starting rate £0...... x0% ......... = 0
Nil rate £1000 x0%..........= 0
Basic rate £369 x20% ........= £73.80
Dividends £6 x0% ........=0

Income tax on which tax has been charged £1375 Tax Due £73.80

I dont understand why the £73.80 tax isnt covered by what remained from the £5000 savings starting point that is talked about.