Tax Free Allowances

Middle_of_the_Road

taxigeoff said:

Dazed_and_C0nfused said:

taxigeoff said:

Dazed_and_C0nfused said:

italydiva said:

Hello, could someone please advise. If I receive £7k pension as my only income, can my remaining personal allowance be combined with my £6k savings allowance to increase the amount I am able to earn tax free on my savings? 

Any advice would be much appreciated. Thank you.

The only allowance you have is the Personal Allowance (either £11,310 or £12,570 depending on whether you have applied for Marriage Allowance).

If your only taxable non savings non dividend income is £7k of pension income then you have the remainder of your Personal Allowance available to use against any interest (or dividends).

Once that has been used up the next £5,000 will be taxed at 0% (savings starter rate band).

And only once that has been used can you use the £1,000 savings nil rate band (0% tax rate).

Hi, am i right in thinking that you will be taxed on interest over £1000 (after £12570)and will need to claim it back using form R40

Banks and building societies stopped deducting tax at source back in April 2016.

Do you mean someone else will be deducting tax?

Is it PPI related interest?

Most people have no need to complete an R40 anymore.

So if my income is £12000 and i had interest of say £3000 i dont have to do anything and i will not pay any tax?

Yes, nothing to pay, although If I've understood how it works from previous posts on here, £2,430 of your savings interest will be taxed at 0%

Dazed_and_C0nfused

taxigeoff said:

Dazed_and_C0nfused said:

taxigeoff said:

Dazed_and_C0nfused said:

italydiva said:

Hello, could someone please advise. If I receive £7k pension as my only income, can my remaining personal allowance be combined with my £6k savings allowance to increase the amount I am able to earn tax free on my savings? 

Any advice would be much appreciated. Thank you.

The only allowance you have is the Personal Allowance (either £11,310 or £12,570 depending on whether you have applied for Marriage Allowance).

If your only taxable non savings non dividend income is £7k of pension income then you have the remainder of your Personal Allowance available to use against any interest (or dividends).

Once that has been used up the next £5,000 will be taxed at 0% (savings starter rate band).

And only once that has been used can you use the £1,000 savings nil rate band (0% tax rate).

Hi, am i right in thinking that you will be taxed on interest over £1000 (after £12570)and will need to claim it back using form R40

Banks and building societies stopped deducting tax at source back in April 2016.

Do you mean someone else will be deducting tax?

Is it PPI related interest?

Most people have no need to complete an R40 anymore.

So if my income is £12000 and i had interest of say £3000 i dont have to do anything and i will not pay any tax?

Correct.

Even if your Personal Allowance is only £11,310 the interest would all fall into the savings starter rate band.  Which has a 0% tax rate 😀