HMRC Personal savings allowance

Nanamouse

My aunt passed away in May of this year (2025). I have received a tax calculation for the tax year 2025/26 which does not show any personal savings allowance against interest received for April and May. However, HMRC have included this as other income which has reduced the amount of PAYE to be refunded in this tax year . Is this correct?

Dazed_and_C0nfused

Nanamouse said:

My aunt passed away in May of this year (2025). I have received a tax calculation for the tax year 2025/26 which does not show any personal savings allowance against interest received for April and May. However, HMRC have included this as other income which has reduced the amount of PAYE to be refunded in this tax year . Is this correct?

There is no "allowance" for interest.

How has the income after deducting Personal Allowance been taxed?

Info from the calculation is key here

LabLady19

Dazed_and_C0nfused said:

Nanamouse said:

My aunt passed away in May of this year (2025). I have received a tax calculation for the tax year 2025/26 which does not show any personal savings allowance against interest received for April and May. However, HMRC have included this as other income which has reduced the amount of PAYE to be refunded in this tax year . Is this correct?

There is no "allowance" for interest.

How has the income after deducting Personal Allowance been taxed?

Info from the calculation is key here

With respect, I think the OP is referring to the following... (copied from .gov site today) Unfortunately I can't answer their question though...

Personal Savings Allowance

You may also get up to £1,000 of interest and not have to pay tax on it, depending on which Income Tax band you’re in. This is your Personal Savings Allowance.

To work out your tax band, add all the interest you’ve received to your other income.

Income Tax band	Personal Savings Allowance
Basic rate	£1,000
Higher rate	£500
Additional rate	£0

Dazed_and_C0nfused

LabLady19 said:

Dazed_and_C0nfused said:

Nanamouse said:

My aunt passed away in May of this year (2025). I have received a tax calculation for the tax year 2025/26 which does not show any personal savings allowance against interest received for April and May. However, HMRC have included this as other income which has reduced the amount of PAYE to be refunded in this tax year . Is this correct?

There is no "allowance" for interest.

How has the income after deducting Personal Allowance been taxed?

Info from the calculation is key here

With respect, I think the OP is referring to the following... (copied from .gov site today) Unfortunately I can't answer their question though...

Personal Savings Allowance

You may also get up to £1,000 of interest and not have to pay tax on it, depending on which Income Tax band you’re in. This is your Personal Savings Allowance.

To work out your tax band, add all the interest you’ve received to your other income.

Income Tax band	Personal Savings Allowance
Basic rate	£1,000
Higher rate	£500
Additional rate	£0

But it isn't an "allowance" so looking for one in a tax calculation is always going to result in disappointment!

eskbanker

Nanamouse said:

My aunt passed away in May of this year (2025). I have received a tax calculation for the tax year 2025/26 which does not show any personal savings allowance against interest received for April and May. However, HMRC have included this as other income which has reduced the amount of PAYE to be refunded in this tax year . Is this correct?

Can you share the figures?

interest_Ted

Nanamouse said:

My aunt passed away in May of this year (2025). I have received a tax calculation for the tax year 2025/26 which does not show any personal savings allowance against interest received for April and May. However, HMRC have included this as other income which has reduced the amount of PAYE to be refunded in this tax year . Is this correct?

My understanding is that if the lady physically received the interest while she was alive, then her PSA would apply.

But if the interest was physically paid after the date of death, (for example – if an account is closed upon notification of death, where that account pays interest on an annual basis – even if that interest was being accrued while the individual was alive) then it is my understanding that it would be payable to the estate, and that the estate is not able to benefit from any PSA.

Ted

p.s. Thanks to original poster for raising this issue.  I had not considered this before.  I will now opt for monthly interest whenever available on my savings accounts !

p.p.s.  I am not an expert so please feel free to correct. 

SnowMan

Sorry that your aunt has died.

Yes you have to differentiate the two issues here, savings interest paid before death and savings interest paid after death (even if it accrued before death but was unpaid at death)

In relation to interest paid before death then my understanding is that your aunt does get the full year's personal savings allowance, when working out tax payable up to death, although that of course is really a 0% band. Your aunt also gets a full years personal allowance in relation to all income up to date of death.

In relation to savings interest paid after death then if the estate savings interest (and dividends) are less than £500 in for example the tax year of death then there is no tax to pay so you don't need to worry about personal savings allowances. If it is more than £500 the estate doesn't get a personal savings allowance as such and estate tax is payable on savings interest at 20%. However, if and when income is passed to any beneficiary, it may be subject to tax at higher rates or the beneficiary may be able to claim repayment of some of the tax paid. 

For example if a beneficiary's share of estate interest was £160 net (£200 gross) and their own savings interest was £700 gross then if they are a basic rate taxpayer they can get a refund of the estate savings interest tax paid, as the total interest will be within their £1,000 personal savings allowance and so would be taxed at the 0% rate. That's just a broad outline of how it works, but detailed information can be found at  

https://www.litrg.org.uk/tax-nic/trusts-and-estates/bereavement-tax-issues-death/tax-income-and-gains-after-death

EthicsGradient

Dazed_and_C0nfused said:

LabLady19 said:

Dazed_and_C0nfused said:

Nanamouse said:

My aunt passed away in May of this year (2025). I have received a tax calculation for the tax year 2025/26 which does not show any personal savings allowance against interest received for April and May. However, HMRC have included this as other income which has reduced the amount of PAYE to be refunded in this tax year . Is this correct?

There is no "allowance" for interest.

How has the income after deducting Personal Allowance been taxed?

Info from the calculation is key here

With respect, I think the OP is referring to the following... (copied from .gov site today) Unfortunately I can't answer their question though...

Personal Savings Allowance

You may also get up to £1,000 of interest and not have to pay tax on it, depending on which Income Tax band you’re in. This is your Personal Savings Allowance.

To work out your tax band, add all the interest you’ve received to your other income.

Income Tax band	Personal Savings Allowance
Basic rate	£1,000
Higher rate	£500
Additional rate	£0

But it isn't an "allowance" so looking for one in a tax calculation is always going to result in disappointment!

When a new poster uses the phrase "personal savings allowance" as the government does, it's pretty useless to just say 'There is no "allowance" for interest' without explanation. It just confuses things more. If you do want to get on to the unhelpful name they chose for it (as some here do, frequently), it's better to wait until the actual subject has been discussed.