Tax on savings

CaptainSkeptical

Hi.  

I’m not great with understanding the information on the HMRC website, hence this question that I'm hoping someone can help me with.  

If my annual income is less than £17,570 (income would be a Defined Benefit pension of £4,000 pa, and drawdown from a SIPP of £8,570 pa, totalling £12,570) does that mean I’d have the difference of £5,000 (from subtracting £12,570 from £17,570) that I could make in interest from savings before paying tax ?

All info gratefully received.

Dazed_and_C0nfused

CaptainSkeptical said:

Hi.  

I’m not great with understanding the information on the HMRC website, hence this question that I'm hoping someone can help me with.  

If my annual income is less than £17,570 (income would be a Defined Benefit pension of £4,000 pa, and drawdown from a SIPP of £8,570 pa, totalling £12,570) does that mean I’d have the difference of £5,000 (from subtracting £12,570 from £17,570) that I could make in interest from savings before paying tax ?

All info gratefully received.

No, assuming you haven't applied for Marriage Allowance it would be £6,000.

If your only non savings non dividend income was the £12,570 from the pensions then the first £6,000 of interest is all taxed at 0%.

£5,000 from the savings starter rate band
£1,000 from the savings nil rate band (aka Personal Savings Allowance)

molerat

You can have (£12500 + £5000 starting rate for savings - £ other income) + £1000 personal savings allowance before paying tax on interest so in your example £6K interest without paying tax.

CaptainSkeptical

That's a bonus !! Thanks very much for clarifying - much appreciated.