Personal Savings Allowance - Housewife 4 November 2022 at 6:58PM in Savings & investments 19 replies 1.2K views

Starnip

Does a housewife who pays no income tax (as no income) have a personal savings allowance?

Or can you save as much as you want, regardless of how much interest you earn and none of it gets taxed? So if you earn £5K in interest in a year and don't have any other income being a housewife do you keep it all? What if you earned £30K in interest?

Bigwheels1111

£12,570 personal allowance tax free.
£ 5,000 savings starter rate tax free
£ 1,000 savings tax free.
£18,570 tax free total.

Starnip

so for a non taxpayer living off savings, they can earn £18,570 in interest before paying a penny in tax on the interest?

Eco_Miser

A housewife, like (nearly) everyone else, can have income from all sources up to £12570 without paying any tax, then a further £5000 interest at zero percent tax, and only then does the £1000 PSA come into play.

So she would keep all of the first £18570, and pay 20% tax on the rest until the 40% rate kicks in.

Dazed_and_C0nfused

Eco_Miser said:

A housewife, like (nearly) everyone else, can have income from all sources up to £12570 without paying any tax, then a further £5000 interest at zero percent tax, and only then does the £1000 PSA come into play.

So she would keep all of the first £18570, and pay 20% tax on the rest until the 40% rate kicks in.

But if the 40% rate was applicable then the savings nil rate (aka Personal Savings Allowance) would only be £500 taxed at 0% not £1,000 taxed at 0%.

As this is a housewife then it's entirely possible she only has a Personal Allowance of £11,310 so all the figures drop by £1,260 meaning tax would be paid above £17,310 not £18,570.

mooneysaver

People are forgetting the £500 housewife's allowance. This is applied after the personal allowance but before the savings starter allowance. However it does not apply to dividend income.

Band7

mooneysaver said:

People are forgetting the £500 housewife's allowance. This is applied after the personal allowance but before the savings starter allowance. However it does not apply to dividend income.

Do you have a link please to the gov.uk website with details of the £500 housewife's allowance?

MX5huggy

Don’t forget she should be putting £2880 into a pension each year grossed up to £3600. 

butterflymum

And don't forget, if she earns over £10000 in interest in a tax year, she needs to register for and complete Self Assessment, even if she has no actual tax due because of the various allowances.

butterflymum

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

Albermarle

Band7 said:

mooneysaver said:

People are forgetting the £500 housewife's allowance. This is applied after the personal allowance but before the savings starter allowance. However it does not apply to dividend income.

Do you have a link please to the gov.uk website with details of the £500 housewife's allowance?

I have read probably hundreds of posts about savings interest tax, and nobody has ever mentioned 'housewifes tax'. so I suspect a link will not be forthcoming....