Bit Confused-Please help with advice

EthicsGradient

As Dazed_and_C0nfused says, it's the pre-tax figure that counts, so you should check what that is. But at a guess, your £13991.28 after tax should, for a single person, be made up of £12,570 personal allowance and £1421.28 after paying 20% tax - which would be 1421.28 / 0.8 = 1776.60 before tax, so a total of £14,346.60.

The £18,570 comes from the "savings starter rate band" - this is designed to allow savings interest to pay no tax when your combined "earnings" (pensions, in your case) and interest are below £17,570. And then the £1,000 Personal Savings Allowance comes on top of that. If your earnings are below £12,570, the starter band is £5,000; if between £12,570 and £17,570, it is "£17,570 minus earnings".

That would then mean you have a fair size savings starter rate band: £17,570 - £14,346.60 = £3,223.40, and the "Personal Savings Allowance" of £1,000 as well means you can get £4,233.40 of interest before you start to pay tax.

That makes Bigwheels1111's example pretty close to your situation. Are you keeping the max £50,000 in Premium Bonds because you do want the best possible chance of getting a big win, or is it only there because you don't pay tax on the prizes? If just the latter, then you'd do better with some of it in regular accounts. If you had:
£50,000 in NS&I @ 6.2% = £3,100
£20,000 in Santander @5.2% = £1,040 (or, say, £18k there, and £2k as the "usual" amount you have in the current account - that'd be more than a month's spending).
That'd be close to the limit before paying tax, but not over. Then either £30k in Premium Bonds; or £10k there, and £20k in an ISA, and in the next tax year, you might move the Premium Bonds into a new ISA.

xylophone

Forgot to say, I pay tax on the pensions. 

https://www.gov.uk/apply-tax-free-interest-on-savings

https://www.litrg.org.uk/tax-guides/savers-property-owners-and-other-tax-issues/savings-and-tax#:~:text=To the extent that dividend,and additional rate taxpayers respectively.

Mo: the starting rate for savings band and personal savings allowance

Scenario A

In 2023/24, Mo has pension income of £14,000 and savings income of £1,500. He has to pay tax at 20% on £1,430 of his pension income (the amount left once his £12,570 personal allowance is used). He does not have to pay any tax on his savings income, because it all falls within the starting rate for savings band – his total income is less than £17,570. Mo does not need to use his personal savings allowance.

Scenario B

If Mo had savings income of £3,650 instead of £1,500, he would not have to pay any tax on his savings income, because £3,570 would fall within the starting rate for savings band and the remaining £80 would fall within his personal savings allowance.

Scenario C

However, if Mo had savings income of £4,650 instead of £1,500, he would have to pay tax at 20% on £80 (the first £3,570 falls within the starting rate for savings band; the next £1,000 falls within the personal savings allowance; the remaining £80 is taxable at 20%). As tax is not collected at source on interest, he will have to pay this £16 tax to HMRC another way.

Scenario D

Finally, if Mo’s pension was £18,000 rather than £14,000 then the starting rate for savings band would not be available to him at all. He would therefore have to pay tax at 20% on £500 of his savings income in scenario A, £2,650 in scenario B and £3,650 in scenario C (that is, the amount left over once his £1,000 personal savings allowance has been used). 

As can be seen from links above, in terms of tax due, whether to choose ISA or non ISA is dependent on your overall financial situation.

LindsayT

Just checked my paperwork and a couple of you were very close.
Before tax my state pension is £10,057.32 and private pension is £4,28433 making a total of £14341.65
So, by reading some of posts, if I take that total away from £18,750, that is the interest I can earn before paying tax?

ColdIron

LindsayT said:

So, by reading some of posts, if I take that total away from £18,750, that is the interest I can earn before paying tax?

If you take it away from £18,570 (not £18,750) that's right

LindsayT

Oops typo. I meant to type £18,570, thanks for the correction.

I've read on the Best Savings page about getting all the interest paid in one tax year versus getting it paid across two tax years.
So, I have another question for everyone. Would it be better for me to take the monthly interest paid away at a lower rate or take the annual higher interest? I'm talking about the bonds with NS&I.