How much interest can a pensioner get tax free?

rjmachin

My dad is a pensioner and his only income is the full new state pension (£203.85 per week) and interest on savings.

I know about the PSA of £1000 that you can earn of interest tax free, but wondered if my dad can earn more than that?

I have read something about a starter rate, but I don't know if that is applicable.

Can you tell me how much interest he will be able to earn without paying tax?

Bigwheels1111

In simple terms.
£18,570 - £10,600.20 Pension = £7,969.80 tax free interest.

£12, 570 Tax free, earnings or interest.
£ 5, 000  interest starter rate
£ 1, 000 PSA.
£18,570 total.

Dazed_and_C0nfused

rjmachin said:

My dad is a pensioner and his only income is the full new state pension (£203.85 per week) and interest on savings.

I know about the PSA of £1000 that you can earn of interest tax free, but wondered if my dad can earn more than that?

I have read something about a starter rate, but I don't know if that is applicable.

Can you tell me how much interest he will be able to earn without paying tax?

The savings nil rate of £1,000 is actually last in the pecking order so he would have to have a lot of interest to be able to use it.

He uses any spare Personal Allowance first (£1,970) then he can use the £5,000 savings starter rate band (0% tax rate).

And only then can he use the £1,000 savings nil rate band (again income taxed at 0%).

iNeed2P

To clarify Bigwheels1111 post.
£10,600.20 is your Dad's annual pension sum. 

Note Bigwheels has edited his/her post 

rjmachin

Perfect, that is really good news.

Thank you for the breakdown

Dazed_and_C0nfused

@rjmachin

Also, if he still has Marriage Allowance in place his Personal Allowance will only be £11,310, not £12,570.

rjmachin

Dazed_and_C0nfused said:

@rjmachin

Also, if he still has Marriage Allowance in place his Personal Allowance will only be £11,310, not £12,570.

Thanks, he did do the marriage allowance a few years ago to my mum, so will check that is still in place.

Beddie

Hope you don't mind me mentioning it, but is he eligible for pension credit, as he only has the state pension as his income apart from savings?

rjmachin

As I understand it, as he has the full new state pension, it is already above the threshold for the criteria of pension credit.

Bigwheels1111

On the MSE show I think Martin said try if you get less than £220 a week.
Its only a phone call.

ColdIron

https://www.moneysavingexpert.com/savings/tax-free-savings/