£1000 savings interest allowance

shazentai

Does anyone know if the threshold for the £1000 savings interest allowance for basic rate tax payers is calculated on total income or taxable income after volutary pension contributions?

eskbanker

Not sure if it's exactly what you're asking but if your total taxable income, including all non-ISA savings interest, is above the higher rate threshold then you get up to £500 of savings interest taxed at 0%, otherwise it's £1,000.

EthicsGradient

It's on taxable income after pension contributions. https://www.gov.uk/guidance/adjusted-net-income

Generally speaking, if your total adjusted net income is less than £50,270 (for 2022/23) then you will have a personal savings allowance of £1,000. Adjusted net income is your total taxable income less certain deductions like gross Gift Aid contributions or pension contributions paid gross. See GOV.UK for more detail.

https://www.litrg.org.uk/tax-guides/tax-basics/what-tax-rates-apply-me

Step 1 - work out your ‘net income’

Add up your taxable income.

Include things like:

money you earn from employment (including any benefits you get from your job)

...interest on savings and pensioners bonds

...

Take off any tax reliefs that apply like:

payments made gross to pension schemes - those that have been made without tax relief
...

Step 3 - take off pension contributions

If you made a contribution to a pension scheme where your pension provider has already given you tax relief at basic rate, take off the ‘grossed-up’ amount - what you paid plus the basic rate of tax.

So, for every £1 of pension contribution you made, take £1.25 from your ‘net income’.

https://www.gov.uk/guidance/adjusted-net-income

(sorry about the formatting - can't work out how it ended up like that - hoep you can work out who wrote what)

shazentai

Thanks, that's the information I was looking for