PIP and the Personal Savings Allowance

RosieRooBear

I’m currently in the support group for ESA and recently claimed PIP and have standard care and enhanced mobility. I know that ESA is taxable income and that PIP isn’t, but can’t find any information on whether PIP is classed as income in relation to the personal savings allowance. Hoping that someone more knowledgeable can enlighten me, many thanks.

Dazed_and_C0nfused

PIP isn't taxable so is irrelevant as far as HMRC are concerned.

https://www.gov.uk/income-tax/taxfree-and-taxable-state-benefits

I presume you are aware that both the Personal Allowance (£11,310 or £12,570) and savings starter rate band (upto £5,000 interest taxed at 0%) must be used before the savings nil rate band (aka Personal Savings Allowance) can be used?

I suspect only a very small minority of ESA claimants will be able to benefit from the PSA.

poppy12345

RosieRooBear said:

I know that ESA is taxable income

Not all ESA is taxable, Income Related isn't. It's only New style or contributions based that's taxable.

RosieRooBear

Thanks @Dazed_and_C0nfused, yes I was aware of the savings starter band and have transferred my marriage allowance to my husband. I just couldn’t find out whether PIP would be included for income, so reducing what I could earn in savings, so thank you so much for letting me know that it isn’t.  You’re right, with around £10,000 I can now earn in interest after taking just the ESA into account, I don’t think I’ll be anywhere close to benefitting from the PSA.

RosieRooBear

Thanks @poppy12345, I’m on contribution based ESA with no other income, but have a self-employed husband who earns a decent wage. At least I know to put all our savings in my name (good job hubby trusts me 😉).

Alice_Holt

RosieRooBear said:

Thanks @poppy12345, I’m on contribution based ESA with no other income, but have a self-employed husband who earns a decent wage. At least I know to put all our savings in my name (good job hubby trusts me 😉).

       You may wish to consider your pension planning alongside your savings strategy.

       The contribution based ESA gives credits for the SP, but as a non-taxpayer you can put up to £2,880 p.a. into a personal pension / SIPP and get a tax uplift of £720. 

RosieRooBear

Thanks @Alice_Holt, I started a SIPP two years ago when we were in a position that we were able to, putting the maximum allowed in. I also have a small DB pension ~£3000pa from many years ago, which I can access when I’m 60 (in 6 years time) if I want. I’ll keep putting the maximum in each year and then if ESA or PIP get stopped before I reach state pension age I’ll have an income that I can access.