Do I pay tax on savings interest if I don't work?

Randy

I left work 3 months ago and have no income at all.. I basically live on savings. Do I still pay tax on my savings interest even if I don't work. 

I would have thought as long as my interest earned is less than the £12,500 allowance I shouldn't pay tax.

eskbanker

You can basically earn up to £18,570 in interest income without paying tax, if receiving nothing else:

https://www.moneysavingexpert.com/savings/tax-free-savings/

Randy

Thanks....

eskbanker

Actually, on reflection, your capacity for earning savings interest without paying tax will be significantly less than that for this tax year, ending 5 April 2024, if you received employment income up to three months ago.

If you earned more than £12,570 in wages/salary in 2023/24 then that will have used up your entire personal tax allowance for the year, and if you earned more than £17,570 you'll only avoid tax on the first £1,000 of your interest income.

Randy

eskbanker said:

Actually, on reflection, your capacity for earning savings interest without paying tax will be significantly less than that for this tax year, ending 5 April 2024, if you received employment income up to three months ago.

If you earned more than £12,570 in wages/salary in 2023/24 then that will have used up your entire personal tax allowance for the year, and if you earned more than £17,570 you'll only avoid tax on the first £1,000 of your interest income.

Yes, Good point. I did earn more than that from April to end of October

yorkiechick

Depends what you earned in the tax year, up to leaving work. If you are not higher rate, you still have a £1000 0% tax allowance on savings interest, £500 if higher rate.

Albermarle

yorkiechick said:

Depends what you earned in the tax year, up to leaving work. If you are not higher rate, you still have a £1000 0% tax allowance on savings interest, £500 if higher rate.

More than that if they earned less than £17,750, due to the savings starter rate.