Tax - close to bands

AmityNeon

EthicsGradient said:

AmityNeon said:

Allocating £270 of the Personal Allowance towards savings income so the full £37,700 Basic rate band is utilised would be more tax efficient, but I'm not sure whether HMRC automatically allocates the Personal Allowance in a manner that maximises savings for the taxpayer.

Yes, they do use allowances in the order that benefits the taxpayer. But it's also the "normal" way they express it - look at earned/pension income first, then savings interest.

I think a lot of 'worked examples' I've come across usually show nil rate bands using up the Basic rate band, causing more savings/dividend income to be taxed at the Higher rate. Very rarely is reallocation of the Personal Allowance mentioned (usually only by websites specialising in tax/accountacy).