Personal savings allowance

johnxgoodall

Is the personal savings allowance of £1000 added to the personal allowance of £12,570 for tax purposes. E.g.If I earn £2000 in interest on savings and 11,000 in salary income would I be liable to tax on £430 or would it be zero as I hadn't reached the combined total of £13,570?

25_Years_On

The first thing to consider is the savings allowance of £5000. If you earn exactly the personal allowance of £12570 you can earn £5000 in savings interest without tax. That amount reduces for every pound you earn over the personal allowance.

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

Dazed_and_C0nfused

Basically you need to consider any non savings and non dividend income to establish any savings starter rate band.

You must use your Personal Allowance first.

Then any savings starter rate band (0% tax rate).

And only once they have been exhausted can you use the savings nil rate band (also 0% and known as the Personal Savings Allowance).

johnxgoodall

Thanks that is most helpful.