PSA and pension contribution...?

soulsaver

I'm sure this has been asked before but I cant find it, apologies.

So my OH's earnings would put her into the 40% tax band but her pension contribution mean she only pays at BR. 

Is her PSA £500, based on her earnings? Or £1000 based on taxed at basic rate? 

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Dazed_and_C0nfused

soulsaver said:

I'm sure this has been asked before but I cant find it, apologies.

So my OH's earnings would put her into the 40% tax band but her pension contribution mean she only pays at BR. 

Is her PSA £500, based on her earnings? Or £1000 based on taxed at basic rate? 

She has to look at her total taxable income first, ignoring the savings nil rate band (aka PSA).

If she isn't higher rate at that point then the first £1,000 of interest is taxed at 0%.

If she is higher rate then only the first £500 of interest is taxed at 0%.  Which could mean she is no longer a higher rate payer.

soulsaver

Thanks Dazed