Marriage Allowance and Tax on savings interest

ljayljay

Can someone please clarify how much savings interest my wife will be able to receive before liable to tax on those savings. 

In earlier tax years she was receiving income below her personal allowance so transferred the £1,260 Marriage Allowance to me. Due to an increase in her pension she has now become liable for BR tax so cancelled the Marriage Allowance for 24/25 onwards. Pension is her only income.

Pension 23/24 = £12,873

Personal Allowance = £11,310 (i.e. £12,570-£1,260)

Dazed_and_C0nfused

£4,437 in total.

The first £3,437 will be taxed under the savings starter rate band (0% tax rate).

The next £1,000 will be taxed under the savings nil rate band (another 0% tax rate).

ljayljay

Dazed_and_C0nfused said:

£4,437 in total.

The first £3,437 will be taxed under the savings starter rate band (0% tax rate).

The next £1,000 will be taxed under the savings nil rate band (another 0% tax rate).

OK thanks I thought as much....so conversely would the following apply to me?

Pension 23/24 = £18,500

Personal Allowance = £13,830 (£12,570+£1,260)

£330 taxed under starter rate band (0%) plus the £1K savings nil rate at 0%.

If so I guess it would have been better to have cancelled the marriage allowance from 23/24 as this would have given her an extra £1,260 starter rate compared to my £330.

Am I understanding this correctly?

 

Dazed_and_C0nfused

You can't have a Personal Allowance greater than £12,570 so you won't have any savings starter rate band available.

Your interest would be taxed at 0% on the first £1,000 and then 20% above that.

Whatever your liability comes to £252 will then be deducted for the Marriage Allowance tax credit.

ljayljay

OK thanks for the clarification...I was trying to think logically which is not very clever when checking tax liabilities for the non tax accountant