Interest Rates up - Tax Free Allowances not going up?

Bernie_Outdoors

After retiring and trying to earn some money from savings, we just got away with paying no tax on the interest we earnt with some ISA coverage and some fixed-rate deals.  We will be looking to reinvest again in December when some savings mature, but the new rates will probably mean that we will have to pay tax on the interest over £1000.  I may have to look at more fixed-rate ISAs, but their rates are not as good.  Any suggestions on making the most of tax-free savings?  Maybe the allowance will increase? 😂

ColdIron

Sunak froze them until 6 April 2026. Kwasi Kwarteng is rumoured to be considering raising them

If you have to pay tax then you are still better off than earning less taxable interest than £1,000. Same story with ISAs, you may be better with higher rates offered by non-ISA products

Premium Bonds?

jimexbox

If you or your partners (if you have one) pension is below £18,570. Your interest on savings will be tax free upto this amount. 

Bernie_Outdoors

jimexbox said:

If you or your partners (if you have one) pension is below £18,570. Your interest on savings will be tax free upto this amount. 

So the £5000 savings rate is separate from the personal savings allowance?

My wife earns say £13000 in state pension and work pensions.  10% of her tax allowance is transferred to me leaving £11310 Tax-free on income.  She will pay tax on the difference between £13000 and £11500?.  However, she can also earn £5000 from savings and a further £1000 for personal savings interest

Have I got that right as I can then definitely adapt my savings to benefit from this 

Dazed_and_C0nfused

No, she loses £1,690 of the savings starter rate band because of the pension income she is paying tax on.

So she has £3,310 savings starter rate to use and then can use the £1,000 savings nil rate band (aka PSA) after that.

Good guide here,

https://www.litrg.org.uk/tax-guides/tax-basics/what-tax-rates-apply-me#toc-how-does-the-starting-rate-for-savings-work-

Bernie_Outdoors

Dazed_and_C0nfused said:

No, she loses £1,690 of the savings starter rate band because of the pension income she is paying tax on.

So she has £3,310 savings starter rate to use and then can use the £1,000 savings nil rate band (aka PSA) after that.

Good guide here,

Brilliant, Thank you so much!

jimexbox

Bernie_Outdoors said:

Dazed_and_C0nfused said:

No, she loses £1,690 of the savings starter rate band because of the pension income she is paying tax on.

So she has £3,310 savings starter rate to use and then can use the £1,000 savings nil rate band (aka PSA) after that.

Good guide here,

Brilliant, Thank you so much!

I'm sure there are many, myself until last year. Who are not aware of the starting saving rate, so don't leverage the tax free amount.

You just need to trust your partner if you're using their allowance.