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Personal Savings Allowance

Hi Folks, 

I can't get my head around this and wondering if someone can clear it up as I assume it's quite simple. I note the personal savings allowance changes from £1000 to £500 if you are a higher rate tax payer. So if you earn 1p over the tax threshold for intermediate tax payers you lose £500 from your allowance? I'm sure that's not right and assume it's proportioned somehow but can't find any detail. 

Any info appreciated!

Comments

  • Hi Folks, 

    I can't get my head around this and wondering if someone can clear it up as I assume it's quite simple. I note the personal savings allowance changes from £1000 to £500 if you are a higher rate tax payer. So if you earn 1p over the tax threshold for intermediate tax payers you lose £500 from your allowance? I'm sure that's not right and assume it's proportioned somehow but can't find any detail. 

    Any info appreciated!
    There is no "allowance" as such, it's a 0% tax rate (500 or 1000).

    Firstly you check your liability without this 0% rate band and if you are a higher rate payer you recalculate your liability with (upto £500 taxed at 0%).

    If basic rate it's £1,000 taxed at 0%.

    And yes, it is a cliff edge.
  • Thanks for the replies folks. I was sure it wouldn't work like that but it now makes sense why I couldnt find any further info! Cheers.
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