Personal savings allce

Silverbird65

I have income 10,380 how is tax on savings calculated. I have about 3000 savings interest. When I tell the tax office they then tax my small pension. I thought I had a 5000 allowance. Still confused sorry.

Dazed_and_C0nfused

There are no "allowances" for savings interest.

But there are two 0% tax rates.

Firstly taxable interest uses any unused Personal Allowance.

Once that has been used you can use any savings starter rate band available (up to £5,000 taxed at 0%)

And only once that has been used can you make use of the savings nil rate band (aka Personal Savings Allowance) (up to £1,000 taxed at 0%)

If your only taxable income is £10,380 you cannot use either of the 0% tax bands.

Or do you mean something else by this?

I have income 10,380

Albermarle

D& C 
If the OP has taxable income of £10,380, then they still have £12570 minus £10,380 of personal allowance left = £2190.

Then they have £3,000 in savings interest , so £3,000 minus £2190 = £810 that will be covered by the £5,000 starter rate band at 0%?

So HMRC should not be trying to tax her pension due to the interest earned.

Or am I confused as well ?

Silverbird65

When I tell them I have savings they just add the interest to my 12570 so 12570+3000=15570 so then they tax .my  small pension of 1220 per yr as there are no remaining allces in their mind. When I mention 5000 starter rate they don't seem to know about it?

Daliah

Silverbird65 said:

When I tell them I have savings they just add the interest to my 12570 so 12570+3000=15570 so then they tax .my  small pension of 1220 per yr as there are no remaining allces in their mind. When I mention 5000 starter rate they don't seem to know about it?

In which case, you should refer them to the Govt website https://www.gov.uk/apply-tax-free-interest-on-savings and/or ask to speak to a Manager

Audaxer

I thought it all happened automatically, in that if your other income is only £10,380 and your savings interest was £3,000, you would not be liable to pay any tax. See link below:
Tax on savings interest: How much tax you pay - GOV.UK (www.gov.uk)

"If your other income is less than £17,570

Your starting rate for savings is a maximum of £5,000. Every £1 of other income above your Personal Allowance reduces your starting rate for savings by £1."

Daliah

Agree, it should all happen automatically but HMRC may have made a mistake. Not knowing about the savings starting rate sounds definitely like a mistake.

Dazed_and_C0nfused

What tax code being used against the pension of £1220?

Is the rest of the pension income the State Pension?

Dazed_and_C0nfused

Albermarle said:

D& C 
If the OP has taxable income of £10,380, then they still have £12570 minus £10,380 of personal allowance left = £2190.

Then they have £3,000 in savings interest , so £3,000 minus £2190 = £810 that will be covered by the £5,000 starter rate band at 0%?

So HMRC should not be trying to tax her pension due to the interest earned.

Or am I confused as well ?

I just wasn't sure if the £10,380 included the £3,000 or not, it's not really clear from how the op outlined things.

Silverbird65

Rest of I come main tax code is state pension which is not full as had yes out of serps. It's about 705 month and I get 1220 from a small pension to cover cope amount. So the give me balance of allce to cover it. When I mention savings the code gets changed on the small pension they just add the interest on as income. Should they do that?  Do I have to get refund at end of yr the money would be handy now.

Dazed_and_C0nfused

You previously said this

so then they tax .my small pension of 1220 per yr 

What tax code is allocated to this small pension?