Savings interest and tax

sandy700

Hi am I understanding correctly what Martin said in his program tonight that even though my wife and I are earning over £1000 each in interest, we won't be paying tax because there is an extra £5000 each we can earn?

We are both pensioners 80 years old.

I have been putting money into ISA's so that our interest from our savings accounts wouldn't exceed £1000 each. 

Dazed_and_C0nfused

sandy700 said:

Hi am I understanding correctly what Martin said in his program tonight that even though my wife and I are earning over £1000 each in interest, we won't be paying tax because there is an extra £5000 each we can earn?

We are both pensioners 80 years old.

I have been putting money into ISA's so that our interest from our savings accounts wouldn't exceed £1000 each. 

The £5,000 depends on how much pension income you have.  And things like earnings, self employment and rental income.  But dividends are not relevant for this.

Say pension income is £14,000.  You pay tax on £1,430 of that so your £5,000 drops by £1,430 to £3,570.  Once that is used you can then use the £1,000 savings nil rate band (0% tax rate).

Bigwheels1111

Add up your pension or pensions.
The first.  £12,570 is tax free. Made up of earnings, pension or interest.
The next  £ 5,000 can be tax free interest.
Then £1,000 PSA.

So they all add up to £18,570
If your pensions are £15,000 you could earn £3,570 of interest tax free.
Does that make sense.
Take your earnings away from £18,570 and what’s left can be tax free interest.

sandy700

Bigwheels1111 said:

Add up your pension or pensions.
The first.  £12,570 is tax free. Made up of earnings, pension or interest.
The next  £ 5,000 can be tax free interest.
Then £1,000 PSA.

So they all add up to £18,570
If your pensions are £15,000 you could earn £3,570 of interest tax free.
Does that make sense.
Take your earnings away from £18,570 and what’s left can be tax free interest.

Yes it all makes sense now 

eskbanker

sandy700 said:

Hi am I understanding correctly what Martin said in his program tonight that even though my wife and I are earning over £1000 each in interest, we won't be paying tax because there is an extra £5000 each we can earn?

As ever, what's gabbled quickly on a TV show is explained elsewhere in writing, to be read at a more leisurely pace for full comprehension:

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