Interest on savings account

kevc1985

Looking for some help, I've tried searching online but cant get a clear answer.

I'm a basic rate tax payer in Scotland, with interest from savings I read this counts towards income and would tip me over the Scottish higher rate income tax threshold for this financial year.

My wage is £42k per year, the interest I'm on track to earn is £3k but if I were to be tipped into the higher rate then my tax free allowance would be cut and i'd pay interest on £2.5k of it, in which case I would look at moving money to premium bonds as my ISA is max'd out.

My questions are:

Does interest count towards income?
If so does this kick in at the Scottish higher rate tax bracket at £43,662 or the UK government tax at £50,271

grumbler

kevc1985 said:

Does interest count towards income?

Yes

If so does this kick in at the Scottish higher rate tax bracket at £43,662 or the UK government tax at £50,271

The latter:  What is the personal savings allowance?

sheslookinhot

As a Scottish taxpayer, my understanding is that interest does count as income and it will kick in at the Scottish tax rate threshold. I will be in a similar situation this and probably next tax years. Especially as I need to move £2.5k from a SIPP.

Bigwheels1111

Could you pay a bit more into your pension. That would lower your earnings.

Doctor_Who

kevc1985 said:

Looking for some help, I've tried searching online but cant get a clear answer.

I'm a basic rate tax payer in Scotland, with interest from savings I read this counts towards income and would tip me over the Scottish higher rate income tax threshold for this financial year.

My wage is £42k per year, the interest I'm on track to earn is £3k but if I were to be tipped into the higher rate then my tax free allowance would be cut and i'd pay interest on £2.5k of it, in which case I would look at moving money to premium bonds as my ISA is max'd out.

My questions are:

Does interest count towards income?
If so does this kick in at the Scottish higher rate tax bracket at £43,662 or the UK government tax at £50,271

Scottish tax rates and bands only apply to non-savings and non-dividend income (so mainly earned income). Savings and dividend income in Scotland are treated as per the rest of the UK (so £1000 PSA if your income is less than £50,270). Interest above the PSA is taxed at 20% or 40% depending if you are a basic rate or higher rate tax payer (using UK rules for basic/higher rate).

https://www.litrg.org.uk/tax-guides/tax-basics/what-tax-rates-apply-me#toc-how-does-the-personal-savings-allowance-work-

kevc1985

Thank you for your comments, I was going to move a chunk of my savings but it looks as though they will be fine where they are