Personal Savings Allowance - I'm confused!

NYCCP

On calling HMRC today to discuss my PSA, I was told the £1,000 + £5,000 tax free interest will not 'kick in' until my income reaches the full £12,570 Personal Allowance. I work part-time, earning approximately £9,500 per annum from my job plus £612 per annum from a small pension, so thought I qualified for tax free interest from my savings? Has anyone else come across the "your PSA won't kick in until you have earned your full £12,570 Personal Allowance? Please help. I'm confused!

DE_612183

You use your personal allowance, then your tax free amount.

So if you say earn £3000 in interest.

you get 9500 + 612 tax free ( £ 10112 ), so you still have £2458 of the £3k can be tax free as part of your  personal allowance, the other £542 would be tax free as part of your savings allowance

NYCCP

Thank you - that's really helped me understand.  I think this is what the HMRC man said but I thought the PSA allowance only kicked in after you'd 'hit' the £12,570.

Thank you very much this is really helpful

Dazed_and_C0nfused

NYCCP said:

On calling HMRC today to discuss my PSA, I was told the £1,000 + £5,000 tax free interest will not 'kick in' until my income reaches the full £12,570 Personal Allowance. I work part-time, earning approximately £9,500 per annum from my job plus £612 per annum from a small pension, so thought I qualified for tax free interest from my savings? Has anyone else come across the "your PSA won't kick in until you have earned your full £12,570 Personal Allowance? Please help. I'm confused!

Yes, you cannot benefit from those two tax rates/bands until you have used all your Personal Allowance.

Also, ISA's are "tax free", normal non ISA interest is taxable and will be taxed if there is no Personal Allowance available.  But for some people the first £6,000 is taxed at 0%.

ColdIron

NYCCP said:

but I thought the PSA allowance only kicked in after you'd 'hit' the £12,570.

It does but also only after the starting rate for savings has been exhausted

Read this

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

Dazed_and_C0nfused

NYCCP said:

Thank you - that's really helped me understand.  I think this is what the HMRC man said but I thought the PSA allowance only kicked in after you'd 'hit' the £12,570.

Thank you very much this is really helpful

It does.  That is is what @DE_612183 said.

Also, if you have applied for Marriage Allowance then you replace the £12,570 figure with £11,310.

NYCCP

Thanks everyone, much clearer now!