MoneySavingExpert Chair, Martin Lewis · Editor, Marcus Herbert

# How much savings will I start paying tax on

edited 1 March at 2:45PM
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edited 1 March at 2:45PM
Partners savings:
• Savings: £20365.00 (ISA allowances will be used up, NOT including this figure!)
• Current interest rate 3.0% (interest paid at the end of every month).
• £2000.00 is added to it at the end of every month.
• Basic rate tax payer earning £35,000
• No other taxable income (unless I'm mistaken!)

I know this question depends on interest rates, but at the current savings rate of 3%, how much savings would he get to before paying tax on savings?

If someone could share the calculation so he can apply it to changing interest rates going forward, that would be greatly appreciated!

## Replies

• Forumite
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What other taxable income does he have?
#2 Saving for Christmas 2023 - £1 a day challenge £740/£1460
• Forumite
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Partners savings:
• Savings: £20365.00
• Current interest rate 3.0%
• £2000.00 is added to it at the end of every month.
• Basic rate tax payer

I know this question depends on interest rates, but at the current savings rate of 3%, how much savings would he get to before paying tax on savings?

If someone could share the calculation so he can apply it to changing interest rates going forward, that would be greatly appreciated!

How can anyone know without any information about their other taxable income, and specifically what type of income it consists of??
• Forumite
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Are the savings within an ISA (yet)?
• Forumite
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If (and others' requests for more precise details are wise) his earned income is over about £18,500, so that we assume he gets no Personal Savings Allowance, and he has no other savings, then the question seems to be "how much savings can be held at x% interest rate before the £1,000 threshold is reached?"

Over the long term, that would be 1000/(x/100) = in this case, 1000/0.03 = £33,333.33 (or just "100000/x" if you prefer). In practice, with the ongoing saving, the point you reach this will depend on whether he gets interest paid monthly or annually, and if the latter, what point in the tax year it's paid.
• Forumite
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Apologies for my lack of important info! I have edited my post to include more information (all edits are in italic)
• Forumite
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To add to @EthicsGradient’s response, with a 3% interest rate and the pattern you describe he wouldn’t reach the £1000 threshold in the first twelve months. If the interest rises then he might tip into paying tax at some point during that 12 months, but when would depend on the new rate and the point in the year when the increase takes place.
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Maybe the £20K ( or part of it )could go into a cash ISA once the new tax year starts?