How to work out the tax on interest over your PSA for a higher rate payer?



  • ColdIron
    ColdIron Posts: 9,000 Forumite
    First Anniversary Name Dropper Photogenic First Post
    edited 26 December 2023 at 9:44PM
    isayhello said:
    For a basic rate tax payer the tax on interest is 20%, the tax on dividends is 8.75% so 11.25% less

    You were considering moving cash into investments to take advantage of the lower tax. With Bed & ISA I was sheltering my existing taxable investments with no change to cash, now I am sheltering cash and preserving investments. It achieves much the same thing
    Ah ok, so you mean now you'd move your cash/savings accounts money into an ISA and leave the GIA investments alone?
    Exactly that
    It will alter my cash/investment ratio a little but I've had the GIA for 8 odd years so I'm comfortable with it. I have a few ITs with (expected) capital losses so managing capitals gains poses no problems in the short to medium term
    As mentioned above pension contributions may be your most effective route to increase your HR tax threshold/minimise 40% tax
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