Personal Savings Allowance 3 May at 5:19PM in Cutting Tax 8 replies 327 views

ro1892

According to https://www.moneysavingexpert.com/savings/personal-savings-allowance/ the personal savings allowance in the higher tax band (i.e up to £150k) is £500 a year, whereas in the additional rate band it is £0. I seem to remember reading something last year that suggested if earning over £100k (but less than £150k) the allowance decreases from £500 for every £10k extra you earn. Something like £110k - the allowance is £400, £120k - the allowance is £300 etc

I can't find this now so am beginning to think I've made it up or dreamt it. Can anyone confirm is that is correct?

RG2015

There is some very good information on the link below.

• Basic-rate (20%) taxpayers: can earn £1,000 in savings interest per year with no tax
• Higher-rate (40%) taxpayers: can earn £500 in savings interest per year with no tax
• Additional-rate (45%) taxpayers: £0 – they do not get an allowance.

https://www.moneysavingexpert.com/savings/personal-savings-allowance/#:~:text=Your personal savings allowance (PSA,paying tax on that interest.

Dazed_and_C0nfused

ro1892 said:

According to https://www.moneysavingexpert.com/savings/personal-savings-allowance/ the personal savings allowance in the higher tax band (i.e up to £150k) is £500 a year, whereas in the additional rate band it is £0. I seem to remember reading something last year that suggested if earning over £100k (but less than £150k) the allowance decreases from £500 for every £10k extra you earn. Something like £110k - the allowance is £400, £120k - the allowance is £300 etc

I can't find this now so am beginning to think I've made it up or dreamt it. Can anyone confirm is that is correct?

You dreamt it 🙂

It's the Personal Allowance which is reduced (when adjusted net income exceeds £100k)

calcotti

Worth noting too that if other income is less than £17, 570 the tax free amount available for interest will be greater than £1000 due to the £5000 starting rate band on savings.
https://www.gov.uk/apply-tax-free-interest-on-savings

hacksawcats

I know people have probably asked lots of times before, but can I ask a question: If I'm transferring funds from a NS&I account to my current account, would I pay tax on the lump sum? (Its about 12k, I'm of working age and I'm on the basic tax rate. What I want to do is eventually move it a higher interest rate savings account.

Dazed_and_C0nfused

No, you pay tax (if need be) on interest not capital.

Jeremy535897

hacksawcats said:

I know people have probably asked lots of times before, but can I ask a question: If I'm transferring funds from a NS&I account to my current account, would I pay tax on the lump sum? (Its about 12k, I'm of working age and I'm on the basic tax rate. What I want to do is eventually move it a higher interest rate savings account.

Sometimes banks tempt new customers from their existing bank with the promise of £100 cash. I don't think they'd get many takers if you had to pay tax on the balance you transferred!

hacksawcats

Thanks for the reply. mmm, forgot to mention that at the moment it's in a non tax state, because the NS&I account is/was in my mothers name who was at retirement age and therefore did not pay tax. My mum has recently passed away and I'm in the process of applying to have the funds transferred to another account. So I was just trying to check that the money would not now become taxable? (Sorry if I'm being thick, so be gentle with me! :-))

purdyoaten2

hacksawcats said:

Thanks for the reply. mmm, forgot to mention that at the moment it's in a non tax state, because the NS&I account is/was in my mothers name who was at retirement age and therefore did not pay tax. My mum has recently passed away and I'm in the process of applying to have the funds transferred to another account. So I was just trying to check that the money would not now become taxable? (Sorry if I'm being thick, so be gentle with me! :-))

It’s not taxable no matter what you do with it. Any interest that you subsequently receive on it may be taxable but that is not your question.