Tax on savings accounts, is it deducted at source?

ac427

IS tax earned from bank savings account deducted at source?

Am i right in thinking there is a £5,000 threshold on interest earned before any tax is due?

molerat

IS tax earned from bank savings account deducted at source?

No

Am i right in thinking there is a £5,000 threshold on interest earned before any tax is due?

Yes and no.  You can receive up to £6000 interest tax free on top of your tax allowance, so up to £18570, but any income eats into the first £17570 of that. Anyone not paying higher rate tax gets £1000 tax free.

wmb194

ac427 said:

IS tax earned (sic) from bank savings account deducted at source?

Am i right in thinking there is a £5,000 threshold on interest earned before any tax is due?

1. No, interest is paid gross.

2. That depends on your other income.

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

ac427

wmb194 said:

ac427 said:

IS tax earned (sic) from bank savings account deducted at source?

Am i right in thinking there is a £5,000 threshold on interest earned before any tax is due?

1. No, interest is paid gross.

2. That depends on your other income.

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

Thanks, So if i earn £50k there is only a £500 allowance because i am on the higher rate of income tax?

masonic

That is correct, unless you pay enough into a pension to increase your basic rate band by a sufficient amount.

eskbanker

ac427 said:

wmb194 said:

ac427 said:

IS tax earned (sic) from bank savings account deducted at source?

Am i right in thinking there is a £5,000 threshold on interest earned before any tax is due?

1. No, interest is paid gross.

2. That depends on your other income.

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

Thanks, So if i earn £50k there is only a £500 allowance because i am on the higher rate of income tax?

To be pedantic, if you earn exactly £50K (in total, including savings interest) then you won't be on the higher rate of income tax, if you live in England, but if your income is a bit higher then you might - if you're close to the cusp then it'll be worth considering options to get you out of higher rate tax, such as increased pension contributions, etc....