Tax on interest income

PawelGK

Hello.

I want to ask here as it's full of knowledgeable people and having checked HMRC website and internet in general, I couldn't find the answer.

I know that interest income tax free allowance is £500 for higher tax rate payers. However, is that being established on the gross income of an individual or rather their taxable income.

I think it's quite self-explanatory that if it's the latter then any additional pension contributions that would take the person's taxable income below the threshold will allow them to earn £1,000 interest tax free. 

Many thanks.

Dazed_and_C0nfused

PawelGK said:

Hello.

I want to ask here as it's full of knowledgeable people and having checked HMRC website and internet in general, I couldn't find the answer.

I know that interest income tax free allowance is £500 for higher tax rate payers. However, is that being established on the gross income of an individual or rather their taxable income.

I think it's quite self-explanatory that if it's the latter then any additional pension contributions that would take the person's taxable income below the threshold will allow them to earn £1,000 interest tax free. 

Many thanks.

You calculate your tax liability ignoring the savings nil (0%) tax band and if you are a higher rate payer you get £500 of interest taxed at 0%.

If you are a basic rate payer you get the full £1,000.

Then you recalculate your liability including the relevant 0% band.

Stma123

Hello 
I am a non tax paying ,  non resident . I have inherited some money ( tax free) and would like to invest it  , what tax would I have to pay on the interest ? I have been trying to get through to HMRC for the answer but to no avail. 

I live in Spain .
Thanks in advance 

eskbanker

Stma123 said:

Hello 
I am a non tax paying ,  non resident . I have inherited some money ( tax free) and would like to invest it  , what tax would I have to pay on the interest ? I have been trying to get through to HMRC for the answer but to no avail. 

I live in Spain .
Thanks in advance 

Where would you plan to save (assuming you mean 'save' rather than 'invest'), bearing in mind the poor availability of UK financial products for non-residents, and how much are you talking about?

Edit: new thread now started:

https://forums.moneysavingexpert.com/discussion/6522200/tax-on-investments