Worse of with interest...?

Ciprico

Are there any situations where you are worse off from generating interest. Ie are there thresholds to be aware of and to avoid by holding cash in non interest bearing accounts over interest bearing accts...,or is it always better to earn the most interest....

MX5huggy

There are edge cases. The higher rate threshold is. £50270. Tip into this by £1 and you loose £500 of savings allowance (from £1000 to £500). Mitigation can be pension or charitable donations. 

At £125140 you loose the whole lot. 

Jaguar98

It's essential to watch out for specific amounts like £50,270 and £125,140 because surpassing them could mean losing some of your savings allowance, so considering options like pensions or charitable donations is a good idea to avoid this.

jimjames

MX5huggy said:

At £125140 you loose the whole lot. 

I know what you're saying but for clarity you lose the allowance, you don't lose all your interest as you'll still pay tax on the whole amount.

Dazed_and_C0nfused

Loss of Marriage Allowance is another cliff edge.

No income taxed at higher rates will mean you are eligible but £1 of income taxed at higher rates would cost you £252.

orange-juice

Do those amounts apply to the whole of uk?

gravel_2

orange-juice said:

Do those amounts apply to the whole of uk?

In Scotland you enter the higher tax band earlier as the Scottish Government has continuously frozen the bands in recent years. However, the amount of tax you pay on interest as a Scottish tax payer is actually the rUK rate (20, 40 or 45%) rather than the Scottish rates (19, 20, 21, 42, 45 or 48%).