The Top Easy Access Savings Discussion Area

patpalloon

chris_the_bee said:

patpalloon said:

How much interest can you earn tax free if no other income? Is it personal allowance + personal savings allowance = £17,570? If you have an income the tax free bit is only £1000 ? Or can you earn up to £12,570 without any impact on your interest?

If you’re a basic rate taxpayer you have an allowance of £1,000 in interest earned before tax is due. If you’re a higher rate taxpayer, the Personal Savings Allowance (PSA) is £500. Additional rate taxpayers lose the PSA completely.

There’s a third level that’ll wipe out tax on interest, and this is for low earners. There’s effectively an extra £5,000 allowance for interest earned, though how much you’ll get depends on your salary.

To be eligible you need to earn less than £17,570 and the total amount is a little complex. For anyone earning under £12,570 you get the full £5,000 a year allowance.

Then for every £1 you earn over £12,570, the starting rate reduces by £1. So someone earning £15,570 a year would lose £3,000 from the allowance, giving them a total of £2,000 they could earn.

This is in addition to the PSA which would be worth the full £1,000.

https://www.gov.uk/apply-tax-free-interest-on-savings

Wow, thanks this is very useful. I currently earn about 14k in interest per year not in premium bonds which are exempt from tax. So I could earn up to the single tax allowance £12,570 which would be untaxed and I wouldn't pay any tax on my interest? Giving a total tax free income of £26,570?

friolento

patpalloon said:

chris_the_bee said:

patpalloon said:

How much interest can you earn tax free if no other income? Is it personal allowance + personal savings allowance = £17,570? If you have an income the tax free bit is only £1000 ? Or can you earn up to £12,570 without any impact on your interest?

If you’re a basic rate taxpayer you have an allowance of £1,000 in interest earned before tax is due. If you’re a higher rate taxpayer, the Personal Savings Allowance (PSA) is £500. Additional rate taxpayers lose the PSA completely.

There’s a third level that’ll wipe out tax on interest, and this is for low earners. There’s effectively an extra £5,000 allowance for interest earned, though how much you’ll get depends on your salary.

To be eligible you need to earn less than £17,570 and the total amount is a little complex. For anyone earning under £12,570 you get the full £5,000 a year allowance.

Then for every £1 you earn over £12,570, the starting rate reduces by £1. So someone earning £15,570 a year would lose £3,000 from the allowance, giving them a total of £2,000 they could earn.

This is in addition to the PSA which would be worth the full £1,000.

https://www.gov.uk/apply-tax-free-interest-on-savings

Wow, thanks this is very useful. I currently earn about 14k in interest per year not in premium bonds which are exempt from tax. So I could earn up to the single tax allowance £12,570 which would be untaxed and I wouldn't pay any tax on my interest? Giving a total tax free income of £26,570?

The maximum tax free amount from taxable income is £18,570. But there are tax-free accounts - ISAs, Premium Bonds, some NS&I accounts whose gains are tax free.If you have your funds in those accounts, there is no limit to how much interest you can earn from these accounts tax free. There are also many income sources which are taxable. Where does your income originate?

This may help: https://www.moneysavingexpert.com/savings/personal-savings-allowance/

ColdIron

patpalloon said:

Wow, thanks this is very useful. I currently earn about 14k in interest per year not in premium bonds which are exempt from tax. So I could earn up to the single tax allowance £12,570 which would be untaxed and I wouldn't pay any tax on my interest? Giving a total tax free income of £26,570?

No. Assuming you have no other income: First you have £12,570 Personal Allowance, then £5,000 Starting Rate for Savings and finally £1,000 Personal Saving Allowance so £18,570 in total

But you can't use the PSA as the Starting Rate for Savings will cover £1,430 with £3,570 to spare

Any other income you have may reduce these figures

Read this

https://www.moneysavingexpert.com/savings/tax-free-savings

Bigwheels1111

patpalloon said:

chris_the_bee said:

patpalloon said:

How much interest can you earn tax free if no other income? Is it personal allowance + personal savings allowance = £17,570? If you have an income the tax free bit is only £1000 ? Or can you earn up to £12,570 without any impact on your interest?

If you’re a basic rate taxpayer you have an allowance of £1,000 in interest earned before tax is due. If you’re a higher rate taxpayer, the Personal Savings Allowance (PSA) is £500. Additional rate taxpayers lose the PSA completely.

There’s a third level that’ll wipe out tax on interest, and this is for low earners. There’s effectively an extra £5,000 allowance for interest earned, though how much you’ll get depends on your salary.

To be eligible you need to earn less than £17,570 and the total amount is a little complex. For anyone earning under £12,570 you get the full £5,000 a year allowance.

Then for every £1 you earn over £12,570, the starting rate reduces by £1. So someone earning £15,570 a year would lose £3,000 from the allowance, giving them a total of £2,000 they could earn.

This is in addition to the PSA which would be worth the full £1,000.

https://www.gov.uk/apply-tax-free-interest-on-savings

Wow, thanks this is very useful. I currently earn about 14k in interest per year not in premium bonds which are exempt from tax. So I could earn up to the single tax allowance £12,570 which would be untaxed and I wouldn't pay any tax on my interest? Giving a total tax free income of £26,570?

No, you have misunderstood the figures.
£12,570 can be earnings, pension or interest and is un taxed.
The next £5,000 if interest is tax free.
Then another £1,000 interest personal savings allowance.
Grand Total £18,570 tax free.
As you get over 10k in interest you need to file a self assessment return.
If you get 14k interest you could earn £4,570 tax free.

friolento

Bigwheels1111 said:

patpalloon said:

chris_the_bee said:

patpalloon said:

How much interest can you earn tax free if no other income? Is it personal allowance + personal savings allowance = £17,570? If you have an income the tax free bit is only £1000 ? Or can you earn up to £12,570 without any impact on your interest?

If you’re a basic rate taxpayer you have an allowance of £1,000 in interest earned before tax is due. If you’re a higher rate taxpayer, the Personal Savings Allowance (PSA) is £500. Additional rate taxpayers lose the PSA completely.

There’s a third level that’ll wipe out tax on interest, and this is for low earners. There’s effectively an extra £5,000 allowance for interest earned, though how much you’ll get depends on your salary.

To be eligible you need to earn less than £17,570 and the total amount is a little complex. For anyone earning under £12,570 you get the full £5,000 a year allowance.

Then for every £1 you earn over £12,570, the starting rate reduces by £1. So someone earning £15,570 a year would lose £3,000 from the allowance, giving them a total of £2,000 they could earn.

This is in addition to the PSA which would be worth the full £1,000.

https://www.gov.uk/apply-tax-free-interest-on-savings

Wow, thanks this is very useful. I currently earn about 14k in interest per year not in premium bonds which are exempt from tax. So I could earn up to the single tax allowance £12,570 which would be untaxed and I wouldn't pay any tax on my interest? Giving a total tax free income of £26,570?

No, you have misunderstood the figures.
£12,570 can be earnings, pension or interest and is un taxed.
The next £5,000 if interest is tax free.
Then another £1,000 interest personal savings allowance.
Grand Total £18,570 tax free.
As you get over 10k in interest you need to file a self assessment return.
If you get 14k interest you could earn £4,570 tax free.

Plus all the tax free income from Premium Bonds, ISAs and  NS&I Index-Linked Certificates (if you are lucky enough to have any)

Depending on where @patpalloons interest originates, it could all be tax free, or all be taxable, or something in between.

friolento

Bigwheels1111 said:

patpalloon said:

chris_the_bee said:

patpalloon said:

How much interest can you earn tax free if no other income? Is it personal allowance + personal savings allowance = £17,570? If you have an income the tax free bit is only £1000 ? Or can you earn up to £12,570 without any impact on your interest?

If you’re a basic rate taxpayer you have an allowance of £1,000 in interest earned before tax is due. If you’re a higher rate taxpayer, the Personal Savings Allowance (PSA) is £500. Additional rate taxpayers lose the PSA completely.

There’s a third level that’ll wipe out tax on interest, and this is for low earners. There’s effectively an extra £5,000 allowance for interest earned, though how much you’ll get depends on your salary.

To be eligible you need to earn less than £17,570 and the total amount is a little complex. For anyone earning under £12,570 you get the full £5,000 a year allowance.

Then for every £1 you earn over £12,570, the starting rate reduces by £1. So someone earning £15,570 a year would lose £3,000 from the allowance, giving them a total of £2,000 they could earn.

This is in addition to the PSA which would be worth the full £1,000.

https://www.gov.uk/apply-tax-free-interest-on-savings

Wow, thanks this is very useful. I currently earn about 14k in interest per year not in premium bonds which are exempt from tax. So I could earn up to the single tax allowance £12,570 which would be untaxed and I wouldn't pay any tax on my interest? Giving a total tax free income of £26,570?

No, you have misunderstood the figures.
£12,570 can be earnings, pension or interest and is un taxed.
The next £5,000 if interest is tax free.
Then another £1,000 interest personal savings allowance.
Grand Total £18,570 tax free.
As you get over 10k in interest you need to file a self assessment return.
If you get 14k interest you could earn £4,570 tax free.

You do not need to fill in any tax return if your £10K+ interest is from ISA accounts.  Income from ISA accounts never needs to be declared.

Also, no income tax is ever due on interest from ISAs.

We don't yet know what the source of @patpalloon's interest earnings is, so hold back with telling them what to do until we know.

Bridlington1

@soulsaver
Cahoot Sunny Day Saver 5.2% (£3k max)

patpalloon

No ISAs currently. I earn approx 14k pa from interest that would be taxable - ie easy access, notice and fixed accounts (plus premium bonds). Currently I am not working and I want to know if it is worthwhile doing some work again as I wouldn't want to lose the tax free status. ie now no tax due on the 14k whereas if I were working only 1k would be tax free? So would be liable for basic rate tax on the rest? This is what I don't understand.

BooJewels

@patpalloon You can earn up to £18,570 in total before you would pay any tax, that could be made up of earnings, pensions and your interest.  So you could earn up to a further £4,570 (approx. £380 per month) before you paid any tax on your interest if it were nudged above the total of the allowances, see below. 

If you were to put your annual allowance of £20k into an ISA, the interest on that would be tax free, so you could add something in the region of £900 to your potential earnings before tax comes in to play.

Your allowances are made up of your (linked to Gov web page):

Personal Allowance = £12,570 - this could be earnings, pensions (inc State Pension) or in the absence of any, interest.

Your starting rate for interest, taxed at 0% = £5,000 - this is reduced pound for pound with any earnings above your Personal Allowance above.  (so if you earned £14,570 in a job, your starting rate would only be £3,000)

Your Personal Savings Allowance = £1,000 - the amount of interest taxed at 0%.

So, £12,570 + £5,000 + £1,000 = £18,570

Zopa_Trooper

As nobody has risen to the challenge of Metro Bank at the top of the table I think its fair to say the other institutions don't see them as a threat or a real competitor in the Easy Access market.