Earnings and Starter Rate

Sunshine_and_Roses

Is the amount calculated before or after stoppages from earnings?
For example, earnings of £15500 per year or take home pay £13800?
Maxed out on premium bonds and ISA, so could do with knowing how much interest I can earn in regular savings accounts before I pay tax on interest. 
Thanks for any help.

El_Torro

It's the gross figure, before tax. So £15,500 in your case.

Dazed_and_C0nfused

Sunshine_and_Roses said:

Is the amount calculated before or after stoppages from earnings?
For example, earnings of £15500 per year or take home pay £13800?
Maxed out on premium bonds and ISA, so could do with knowing how much interest I can earn in regular savings accounts before I pay tax on interest. 
Thanks for any help.

What are you including in "stoppages"?

If it's just tax and NI then the £15,500 is the key figure.  But if pension contributions are a factor it may be the £15,500 is not the figure that counts.

Sunshine_and_Roses

El_Torro said:

It's the gross figure, before tax. So £15,500 in your case.

Thanks for your quick reply,  much appreciated.  So I can earn (roughly) £3000 in interest before tax this year, including the £1000 for being a basic tax payer.  I will have about £1500 from a 3 year fix with £10k in, then interest from other savings in emergency funds.  I am due an inheritance of approx £75k later this year, so i believe my options would be to pay interest on savings, put into pension (looking to retire within 5 years) or investment outside S&S ISA.

From reading posts here I think the advice would be my workplace pension?

kempiejon

Sunshine_and_Roses said:

... I am due an inheritance of approx £75k later this year, so i believe my options would be to pay interest on savings, put into pension (looking to retire within 5 years) or investment outside S&S ISA.

From reading posts here I think the advice would be my workplace pension?

Workplace pensions/SIPP would be limited; your earnings could factor. Ways to reduce any tax on £75k would be ISAs and pensions each year, pensions locked until 55/7. There's also short dated gilts, family bonds and an annual allowance of £500 in dividednds and £3k capital gains in unsheltered share dealing accounts

Sunshine_and_Roses

kempiejon said:

Sunshine_and_Roses said:

... I am due an inheritance of approx £75k later this year, so i believe my options would be to pay interest on savings, put into pension (looking to retire within 5 years) or investment outside S&S ISA.

From reading posts here I think the advice would be my workplace pension?

Workplace pensions/SIPP would be limited; your earnings could factor. Ways to reduce any tax on £75k would be ISAs and pensions each year, pensions locked until 55/7. There's also short dated gilts, family bonds and an annual allowance of £500 in dividednds and £3k capital gains in unsheltered share dealing accounts

Both myself and husband have maxed out ISAs this year, so will look into other options you have suggested.  

molerat

With the 3 year fix you need to know how the provider has declared the interest - have they applied it each year and declared it to HMRC or applied each year but not declared it or applied at end of term ?

Sunshine_and_Roses

molerat said:

With the 3 year fix you need to know how the provider has declared the interest - have they applied it each year and declared it to HMRC or applied each year but not declared it or applied at end of term ?

Yes I need to check that, can't remember what they did last year.  Thanks for the reminder.

Edit - been in touch with the bank to check, they replied:
Nationwide reports interest to HMRC in the tax year that it is paid into your account, not necessarily when it becomes accessible or when the account matures 

So should be about £550 not £1500 reported which is a win for me.

Sunshine_and_Roses

Dazed_and_C0nfused said:

Sunshine_and_Roses said:

Is the amount calculated before or after stoppages from earnings?
For example, earnings of £15500 per year or take home pay £13800?
Maxed out on premium bonds and ISA, so could do with knowing how much interest I can earn in regular savings accounts before I pay tax on interest. 
Thanks for any help.

What are you including in "stoppages"?

If it's just tax and NI then the £15,500 is the key figure.  But if pension contributions are a factor it may be the £15,500 is not the figure that counts.

Yes, I was counting tax, NI and pension.  Pension figure is 5%, approx £65 per month.

Dazed_and_C0nfused

Sunshine_and_Roses said:

Dazed_and_C0nfused said:

Sunshine_and_Roses said:

Is the amount calculated before or after stoppages from earnings?
For example, earnings of £15500 per year or take home pay £13800?
Maxed out on premium bonds and ISA, so could do with knowing how much interest I can earn in regular savings accounts before I pay tax on interest. 
Thanks for any help.

What are you including in "stoppages"?

If it's just tax and NI then the £15,500 is the key figure.  But if pension contributions are a factor it may be the £15,500 is not the figure that counts.

Yes, I was counting tax, NI and pension.  Pension figure is 5%, approx £65 per month.

So you need to check what method is used for your pension contributions.

If they are net pay then your taxable pay will be less than £15,500, leaving more savings starter rate band available.

That doesn't apply to relief at source contributions (where you get tax relief added within your pension fund).

You can probably see on your payslip if there is a difference between your salary and taxable pay.