PSA

herman007

Hi i have a pension of £8500 per year. However I have interest on savings which will be more than the allowed £1000. Will this mean that i will have to pay tax on any interest i earn over the £1000. I would be grateful for any advice

refluxer

You can potentially earn up to £18,570 in combined income (salary/pension) and savings interest without paying tax - have a read of MSE's guide to the savings starter rate...

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

If your pension is £8500 and you have no other income, than you can earn up to £10,070 in savings interest without paying tax on it.

herman007

Hi many thanks for your advice , will take a look now thanks

Kim_13

No, your interest will first be applied against your remaining personal allowance (£12,570 - £8,500 = £4,070 more interest tax free there.)

You will then receive the £5,000 starter savings band in full, as your pension income is below your personal allowance (above this it would start to taper off.)

When that is used you then get the £1,000 PSA, so in your situation you can actually earn £10,070 in interest without having any tax to pay on it.

Bigwheels1111

Are you getting pension credit ?
Rent paid, council tax deduction etc as your income is very low.
Savings can effect these.

where_are_we

Are you between 55 and 75? Have you stopped working? If so, you could contribute £2880 net (£3600 gross) to a SIPP and then, after the tax relief has been addded by HMRC (6 or so weeks), make a withdrawal ,75% of which,  when added to your pension income plus savings interest would take you up to £12570 would give you a return in excess of 20% on that withdrawal. Search the pensions forum with £2880 SIPP contribution.