Question about the Personal Savings Allowance.

whattochoose

 I'm a basic rate taxpayer, and so far haven't had to worry about incurring tax liability on my savings. However, I've been able to re-invest savings and am now receiving a much higher rate of interest (now 5.89%, previously 1.10%).
However, while I have a reasonable amount of savings already held, my actual monthly/annual income is quite low, leading me to believe that as well as the £1000 of savings interest I'm allowed, I will also benefit from the "starting rate for savings", where my income is below £17570.
However, I'm not 100% sure I will escape tax liability in the future, as things stand, and I was wondering whether members think the chancellor may well increase the tax-free allowance on savings interest in the Autumn Statement?
Thank you.

eskbanker

The fact that more people are exceeding the PSA could be interpreted as signifying that the value should be increased, but the obvious counter to that is that it's only those with relatively substantial savings who'd be affected, i.e. those who are in least need of tax concessions.  Of course, there may be proportionally more of those inclined to vote for the chancellor's party in the forthcoming GE, so it may be politically expedient to increase it, even if foregoing the tax revenues makes little objective economic sense....

[Deleted User]

Hi,

who knows what the chancellor might do, but whatever, is it not better paying 20% tax on 5.89%, you still get 4.12% interest.

Are you fully paid up in  tax free ISAs?

ColdIron

whattochoose said:

I was wondering whether members think the chancellor may well increase the tax-free allowance on savings interest in the Autumn Statement?

Zero chance. Frozen until 2028

• At March Budget 2021, then Chancellor Sunak announced that the personal allowance (PA) and higher-rate thresholds (HRT) of income tax would be frozen at 2021-22 levels for the four years up to and including 2025-26. At Autumn Statement 2022 Chancellor Hunt extended the freeze by a further two years. The now six-year freeze in the PA takes its real value in 2027-28 back to its 2013-14 level.

https://obr.uk/box/the-impact-of-frozen-or-reduced-personal-tax-thresholds/

eskbanker

ColdIron said:

whattochoose said:

I was wondering whether members think the chancellor may well increase the tax-free allowance on savings interest in the Autumn Statement?

Zero chance. Frozen until 2028

• At March Budget 2021, then Chancellor Sunak announced that the personal allowance (PA) and higher-rate thresholds (HRT) of income tax would be frozen at 2021-22 levels for the four years up to and including 2025-26. At Autumn Statement 2022 Chancellor Hunt extended the freeze by a further two years. The now six-year freeze in the PA takes its real value in 2027-28 back to its 2013-14 level.

https://obr.uk/box/the-impact-of-frozen-or-reduced-personal-tax-thresholds/

But that's the personal allowance (£12,570) rather than the £1,000/£500 personal savings allowance which is what I believe OP meant by "the tax-free allowance on savings interest".

ColdIron

eskbanker said:

ColdIron said:

whattochoose said:

I was wondering whether members think the chancellor may well increase the tax-free allowance on savings interest in the Autumn Statement?

Zero chance. Frozen until 2028

• At March Budget 2021, then Chancellor Sunak announced that the personal allowance (PA) and higher-rate thresholds (HRT) of income tax would be frozen at 2021-22 levels for the four years up to and including 2025-26. At Autumn Statement 2022 Chancellor Hunt extended the freeze by a further two years. The now six-year freeze in the PA takes its real value in 2027-28 back to its 2013-14 level.

https://obr.uk/box/the-impact-of-frozen-or-reduced-personal-tax-thresholds/

But that's the personal allowance (£12,570) rather than the £1,000/£500 personal savings allowance which is what I believe OP meant by "the tax-free allowance on savings interest".

Yes, it could be read that way, but with the mention of 'my actual monthly/annual income is quite low' in addition to 'tax-free' I read it the other way and exercised my inner @Dazed_and_C0nfused

However I think it amounts to the same thing. The PSA has not been increased since inception and think it would be optimistic to expect either to be increased for the foreseeable

NB I've just realised the title of this thread

eskbanker

ColdIron said:

eskbanker said:

ColdIron said:

whattochoose said:

I was wondering whether members think the chancellor may well increase the tax-free allowance on savings interest in the Autumn Statement?

Zero chance. Frozen until 2028

• At March Budget 2021, then Chancellor Sunak announced that the personal allowance (PA) and higher-rate thresholds (HRT) of income tax would be frozen at 2021-22 levels for the four years up to and including 2025-26. At Autumn Statement 2022 Chancellor Hunt extended the freeze by a further two years. The now six-year freeze in the PA takes its real value in 2027-28 back to its 2013-14 level.

https://obr.uk/box/the-impact-of-frozen-or-reduced-personal-tax-thresholds/

But that's the personal allowance (£12,570) rather than the £1,000/£500 personal savings allowance which is what I believe OP meant by "the tax-free allowance on savings interest".

Yes, it could be read that way, but with the mention of 'my actual monthly/annual income is quite low' in addition to 'tax-free' I read it the other way and exercised my inner @Dazed_and_C0nfused

However I think it amounts to the same thing. The PSA has not been increased since inception and think it would be optimistic to expect either to be increased for the foreseeable

Perhaps worth reading the thread title as well as its content!  But yes, I wasn't really suggesting that the PSA is likely to be increased (except idly musing on the possibility in the earlier post), but simply highlighting that the government hasn't publicly committed to a long term freeze....

Albermarle

eskbanker said:

The fact that more people are exceeding the PSA could be interpreted as signifying that the value should be increased, but the obvious counter to that is that it's only those with relatively substantial savings who'd be affected, i.e. those who are in least need of tax concessions.  Of course, there may be proportionally more of those inclined to vote for the chancellor's party in the forthcoming GE, so it may be politically expedient to increase it, even if foregoing the tax revenues makes little objective economic sense....

In addition the ability to earn tax free interest in the UK is already generous by international standards.
Just ask the Irish !