Managing down tax on savings interest

JG_jiggy

Hi all, 

Hoping you can help. 

I received a payrise in August, taking my gross pay to £43, 824. 

I have money in savings, which probably means I've earned about £1200 in interest, although a couple of months ago I realised I would be hit by having gone into the higher rate tax band, meaning I'm hit by the lower allowance for savings interest.  

Can anyone advise on whether a quick redirect of some pay into pension would make a difference?

I'll move more into an ISA in the new financial year, just been a bit slow to realise the issue. 

Thanks

ColdIron

The higher rate threshold is £50,270 so you are not there yet and have some headroom before you are

However once you do exceed the threshold pension and ISA contributions could reduce or eliminate the tax you pay at the higher rate. Are you in Scotland?

JG_jiggy

Hi @ColdIron, yes I'm in Scotland. 

ColdIron

Scottish rates apply to your earned income and ISA or pension contributions would reduce your tax liability. For savings (and dividends) UK rates and thresholds apply so currently your £1,200 would still be at basic rate and you still have the £1,000 Personal Savings Allowance