tax free interest

My wife age 77, has a state pension of £5309  plus £360 private, totalling £5669. Her tax code allowance is £11475 having donated some to myself. How much interest can she receive from her savings before she has to pay tax.   What I need is a simple explanation of tax free interest allowance for this case.

Comments

  • Brie
    Brie Posts: 9,271
    Photogenic First Post Name Dropper First Anniversary
    Forumite
    At least all the way up to her tax limit of £11475 but I believe someone mentioned there is an extra limit for interest above that.  Might just be the £1k that anyone gets.  So at least £12475 - 5669 =   £6806 interest possibly.
    "Never retract, never explain, never apologise; get things done and let them howl.”
  • Dazed_and_C0nfused
    Dazed_and_C0nfused Posts: 12,754
    First Anniversary First Post Name Dropper
    Forumite
    edited 24 January at 4:12PM
    My wife age 77, has a state pension of £5309  plus £360 private, totalling £5669. Her tax code allowance is £11475 having donated some to myself. How much interest can she receive from her savings before she has to pay tax.   What I need is a simple explanation of tax free interest allowance for this case.
    You don't pay tax on tax free interest (from cash ISA's).  Assuming you mean taxable interest then she can have £11,641 before any tax would be payable on it.

    £5,641 covered by her spare Personal Allowance
    £5,000 taxed at 0% (savings starter rate)
    £1,000 taxed at 0% (savings nil rate)
    The above is based on her reduced Personal Allowance. It might be more if you can explain how the £11,475 is arrived at.
  • On checking I see that she transferred £1260 of her personal allowance to me, so the £11,475 should be £11,310 and yes, I do mean taxable interest. I was confused by Martin Lewis saying that you would pay no tax below £18,000. I believe that is true if ones earned income is about the same as  your personal allowance.
Meet your Ambassadors

Categories

  • All Categories
  • 341.7K Banking & Borrowing
  • 249.7K Reduce Debt & Boost Income
  • 449.1K Spending & Discounts
  • 233.8K Work, Benefits & Business
  • 606K Mortgages, Homes & Bills
  • 172.5K Life & Family
  • 246.7K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.8K Discuss & Feedback
  • 15.1K Coronavirus Support Boards