Personal Allowance & Savings Interest

wtiasa1997

I am aware of the following allowances/rates -

* Personal Allowance £12,570

* Starting Savings Rate £5,000 taxed at 0%

* Personal Savings Allowance £1,000 (for a basic-rate taxpayer)

I am a retiree & my only ‘income’ from all sources is the interest I receive from bank & building society accounts. How much interest can I receive each tax year before I will be liable to pay tax on any of it? 

Is it £12,570 or £17,570 or £18,570?

RG2015

£18,750 as long as you haven’t transferred any allowance for the 10% marriage allowance transfer.

refluxer

If you have no other income, then you can earn up to £18,570 from savings interest without paying tax, as far as I understand it.

Bobblehat

Sorry if you already know this, but if you currently receive, or will receive in the future any Pension payments, they will count towards income in the calculation to how much tax you may pay on Savings interest.

RG2015

wtiasa1997 said:

I am aware of the following allowances/rates -

* Personal Allowance £12,570

* Starting Savings Rate £5,000 taxed at 0%

* Personal Savings Allowance £1,000 (for a basic-rate taxpayer)

I am a retiree & my only ‘income’ from all sources is the interest I receive from bank & building society accounts. How much interest can I receive each tax year before I will be liable to pay tax on any of it? 

Is it £12,570 or £17,570 or £18,570?

Is there any relevance in putting 'income' in quotation marks?

Does this imply that you have income that you do not consider to be income, or am I reading too much into this?

wtiasa1997

I only used ‘income’ in quotation marks as some people might not class savings interest as income. 

My understanding is that savings interest counts as income for the purposes of the Personal Allowance, but I have read conflicting/confusing information on other sites and webpages as to whether you can still get £5,000 of Starting Savings Rate taxed at 0% plus £1,000 Personal Savings Allowance in addition if all of your £12,570 Personal Allowance is used up solely by bank/building society interest.

To clarify, I am a recent retiree who is not in receipt of any private or State Pension income, nor any other income from any other source apart from my bank & building society interest. I have the full £12,570 Personal Allowance as I haven’t transferred any of it through the 10% Marriage Allowance. RG2015 said:

wtiasa1997 said:

I am aware of the following allowances/rates -

* Personal Allowance £12,570

* Starting Savings Rate £5,000 taxed at 0%

* Personal Savings Allowance £1,000 (for a basic-rate taxpayer)

I am a retiree & my only ‘income’ from all sources is the interest I receive from bank & building society accounts. How much interest can I receive each tax year before I will be liable to pay tax on any of it? 

Is it £12,570 or £17,570 or £18,570?

Is there any relevance in putting 'income' in quotation marks?

Does this imply that you have income that you do not consider to be income, or am I reading too much into this?

jimexbox

wtiasa1997 said:

I only used ‘income’ in quotation marks as some people might not class savings interest as income. 

My understanding is that savings interest counts as income for the purposes of the Personal Allowance, but I have read conflicting/confusing information on other sites and webpages as to whether you can still get £5,000 of Starting Savings Rate taxed at 0% plus £1,000 Personal Savings Allowance in addition if all of your £12,570 Personal Allowance is used up solely by bank/building society interest.

To clarify, I am a recent retiree who is not in receipt of any private or State Pension income, nor any other income from any other source apart from my bank & building society interest. I have the full £12,570 Personal Allowance as I haven’t transferred any of it through the 10% Marriage Allowance. RG2015 said:

wtiasa1997 said:

I am aware of the following allowances/rates -

* Personal Allowance £12,570

* Starting Savings Rate £5,000 taxed at 0%

* Personal Savings Allowance £1,000 (for a basic-rate taxpayer)

I am a retiree & my only ‘income’ from all sources is the interest I receive from bank & building society accounts. How much interest can I receive each tax year before I will be liable to pay tax on any of it? 

Is it £12,570 or £17,570 or £18,570?

Is there any relevance in putting 'income' in quotation marks?

Does this imply that you have income that you do not consider to be income, or am I reading too much into this?

You're entitled to 18,570 of interest tax free, if that's your only income. 

dgpur

wtiasa1997 said:

I am aware of the following allowances/rates -

* Personal Allowance £12,570

* Starting Savings Rate £5,000 taxed at 0%

* Personal Savings Allowance £1,000 (for a basic-rate taxpayer)

I am a retiree & my only ‘income’ from all sources is the interest I receive from bank & building society accounts. How much interest can I receive each tax year before I will be liable to pay tax on any of it? 

Is it £12,570 or £17,570 or £18,570?

Others have already confirmed this but, if it offers any further reassurance, I had a chat with a man from the HMRC a while back (I’m in a similar position to you) and he confirmed it was the £18,570 figure. 

Of course there’s also the £20,000 allowance for ISAs - plus a £2000 allowance for dividends and £12,300 for capital gains if you want to dabble in shares. If you’re living on income from a large lump sum, it’s ptetty hard to put yourself in the position of paying tax at all, if you use all your options!

Dazed_and_C0nfused

Marriage Allowance only impacts the allowance of the applicant, not the receiver.

You say you have "annual income" of £10,000 - is that your total taxable income?

If so you won't be due to pay any tax and could earn an additional £7,310 in interest before any tax was payable.  Other types of additional income may mean tax is payable on smaller amounts.

If any additional income is just from interest then no tax is payable for these reasons (and in this strict order),

Personal Allowance £1,310
Savings starter rate £5,000 (taxed at 0%)
Savings nil rate £1,000 (taxed at 0%)

Dazed_and_C0nfused

My wife has an annual income of £14,500. As I understand, that means that her allowance is £18,570 - £14,500, leaving a balance of £4,070 which can be set against savings interest before paying income tax. However, as she receives the 10% marriage allowance of £1,260 from myself, I wondered if this has any affect on the £4,070 figure. 

Unfortunately this isn't detailed enough to explain her position.

Can you provide a breakdown of her "annual income" split between these 3 elements

Non savings non dividend i.e. earnings, pension, rental income etc

Savings interest

Dividends

NB.  Only include taxable income.

art123_2

Earnings £11,000 Pension £3,500