Tax on Savings

Muttleythefrog

Trying to understand if I am correct in my calculations here to work out maximum amount of tax free savings. Unfortunately every calculator I seem to find, and examples given, seem to assume you have taxable income above Personal Allowance.

I will soon acquire inheritances and lose income related benefits (Universal Credit) along with my partner.

I will retain a taxable contribution based benefit considered below and a non taxable benefit (PIP) which I shall discount from consideration.

Taxable benefit income: £6734 per annum

My only other income will be interest from savings (and non taxable PIP).

My tax code is standard giving me Personal Allowance £12570

My calculation for maximum untaxed savings interest per year is:

£12570+ £5000 (Starting rate)+ £1000 (Basic rate Personal Savings Allowance)- £6734 (Taxable income) = £11836

Is this correct?

My partner will have similar circumstances except her taxable benefit income will be lower at £3991 per annum and therefore I assume her untaxed annual savings interest could be up to £14579.

Thanks in advance.

Dazed_and_C0nfused

Basically yes.

The first £5,836 will be covered by your unused Personal Allowance.

The next £6,000 will be taxed at 0% (savings starter and savings nil rate band).

If your interest is £10k or more then you should register for Self Assessment with HMRC even if no tax is owed.

Muttleythefrog

Dazed_and_C0nfused said:

Basically yes.

The first £5,836 will be covered by your unused Personal Allowance.

The next £6,000 will be taxed at 0% (savings starter and savings nil rate band).

If your interest is £10k or more then you should register for Self Assessment with HMRC even if no tax is owed.

Thanks very much.. and the £10k+ HMRC Self Assessment issue noted.