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Personnel savings allowance for someone on a tax threshold?
BakingC
Posts: 119 Forumite
in Cutting tax
Theoretical situation but something I might find myself in when my annual bonus / salary review comes in.
If someone has savings generating £600 interest per tax year and had other earnings (base salary, bonus) coming to say £45,850 (£500 under higher earner tax threshold) would the personnel savings allowance be assessed at higher or lower earnings?
Earnings excluding interest are lower rate so allowance would be £1k but total interest takes earnings into the higher bracket so this would reduce the threshold to £500 making more tax payable. If this was the case it would be in my interest to move some cash savings into another non interest saving vehicle such as s&s ISA.
If someone has savings generating £600 interest per tax year and had other earnings (base salary, bonus) coming to say £45,850 (£500 under higher earner tax threshold) would the personnel savings allowance be assessed at higher or lower earnings?
Earnings excluding interest are lower rate so allowance would be £1k but total interest takes earnings into the higher bracket so this would reduce the threshold to £500 making more tax payable. If this was the case it would be in my interest to move some cash savings into another non interest saving vehicle such as s&s ISA.
0
Comments
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In the situation you have outlined the savings income would be taxed as follows
£500 x 0% (Personal Savings Allowance nil rate)
£100 x 40% (savings higher rate)0
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