Declaring savings interest earned over £1k

wrenlegs

Dazed_and_C0nfused said:

Nearly.

The savings starter rate band is withdrawn pound for pound as your non savings non dividend income exceeds your Personal Allowance.

So with earnings of £13,000 you would lose £430 of it and have £4,570 still to use.  Plus the £1,000 savings nil rate band.

If you had earnings of £13,000 and self employment profits of £2,000 then you would have £2,570 of the savings starter rate band left to use.  And then the £1,000 savings nil rate band.

Ok. I think I’m understanding this now. I always thought that if someone earned over their personal tax allowance in income, that they would only get the £1000 savings nil rate band. But actually, if they earn say £15k they still have £2.5 k of the savings starter rate to earn savings interests PLUS the £1k savings nil band. The person earning under their personal allowance for tax should have the rest of their personal tax allowance for savings interest plus all of the £5k savings starter rate plus the £1k savings nil rate band. 

I think that’s it! If that is now correct, then I can go back to the drawing board. And if that is all indeed correct, then you have done a fine job in helping me and I am very appreciative of the time you have taken to explain it to me. 

Doctor_Who

Dazed_and_C0nfused has explained how it works above, if you want to read more there is info on the MSE website:

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

handful

Wow, I have just stumbled across this thread and is great news for my situation. I'm a HR tax payer and have recently inherited a significant sum. Having used up our pension and ISA limits for the year, I've been trying to be creative with the remaining investments (Premium Bonds etc) and this makes a huge difference to us. I knew about the £500 interest limit for me as a HR tax payer and the £1000 limit for my OH but she is only PT and earns around her personal allowance of £12k so this gives us a significant opportunity. You never know what you don't know as the saying goes. Thanks to the contributors to this thread.

Dazed_and_C0nfused

I knew about the £500 interest limit for me as a HR tax payer and the £1000 limit for my OH but she is only PT and earns around her personal allowance of £12k so this gives us a significant opportunity. You never know what you don't know as the saying goes

Just to be clear, your wife will only be able utilise the savings nil rate band (aka PSA) after she has used any spare Personal Allowance and the savings starter rate band.

Shylock

Dazed_and_C0nfused said:

So with earnings of £13,000 you would lose £430 of it and have £4,570 still to use.  Plus the £1,000 savings nil rate band.

If you had earnings of £13,000 and self employment profits of £2,000 then you would have £2,570 of the savings starter rate band left to use.  And then the £1,000 savings nil rate band.

Presumably State as well as Gross Private Pension Income is included as "earnings", and Tax Free State Benefits, such as Attendance Allowance, aren't?

xylophone

Presumably State as well as Gross Private Pension Income is included as "earnings",

Taxable income......AA is not taxable.

Noneforit999

I wonder how many people have kept track of how much above the PSA they have gone last year or this year?

I haven't, my Wife and I have had several savings accounts, moving money after a few months to another savings account due to the rate increasing.

Both of us are over the allowance for the past 12 months so will have to wait and see what HRMC has to say when they adjust our tax codes next.

Fortunately we have now got most of it into ISA's leaving the remainder to keep us below the PSA limits. 

Frogletina

Noneforit999 said:

I wonder how many people have kept track of how much above the PSA they have gone last year or this year?

I haven't, my Wife and I have had several savings accounts, moving money after a few months to another savings account due to the rate increasing.

Both of us are over the allowance for the past 12 months so will have to wait and see what HRMC has to say when they adjust our tax codes next.

Fortunately we have now got most of it into ISA's leaving the remainder to keep us below the PSA limits. 

Last year my total was £1110.37

My total for this year is currently at £1042.26, and if I don't make any changes it will be £1580.96 by the end of the tax year

I can't add to my ISAs until the new tax year.