Tax on savings

Dazed_and_C0nfused

susanann_2 said:

So if your the recipient of the marriage allowance you can’t add it to your personal allowance. £12570 plus £1260 plus £5000 plus £1000 am I understanding correctly. If your the recipient it increases your personal allowance hence why you do it, but it can’t be used for the calculation. Seems strange as your increasing your personal allowance. I have been confused with this for awhile now. 

Marriage Allowance doesn't increase your Personal Allowance.

It does increase your tax code allowances so that you can get the benefit during the year but if you ever get a proper tax calculation you will see that you only have the standard Personal Allowance but also get a tax deduction.

So say your tax liability was normally say £2,300 it would be reduced by £252* to £2,048 by receipt of Marriage Allowance

*£1,260 x 20% = £252

oz0707

Dazed_and_C0nfused said:

oz0707 said:

If you are basic rate with salary at optimum directors level and dividends up to basic rate does savings interest push you into higher rate or is it just taxed at 20% providing you're basic rate on other income?

Reading between the lines you could have spare Personal Allowance, the savings starter rate and savings nil rate to utilise before any 20% tax was payable.

But tax is all about the detail so some actual figures would be useful as it's not always straightforward with a bigger mix of income types

Dividends don't restrict the savings starter rate band though.

Thanks I will make sure to mention it to accountant come year end