Calculating PSA

vikkimcd

Hi,

Is there a template for working out your PSA please? Does it include PIP benefit? I work part time, and want to work out if I will be going over with my savings interest.

eskbanker

Not sure what you mean - the PSA is £1K for basic rate taxpayers and £500 for higher rate, and relates to interest earned from savings and investments.

Dazed_and_C0nfused

And you wouldn't include non taxable income when determining if you were a higher rate payer or not (I'm assuming PIP is DWP's Personal Independence Payment).

vikkimcd

Sorry, I worded that incorrectly. I am trying to work out if I come under the allowance total re: income, or if I need to pay tax. I have some interest for savings and am really stressing that I might need to pay tax on it. I've gone through the MSE stuff, but I guess I have read it too much and going round in circles.

From the above, I am taking it that I would not include Personal Independent Payment in the income?

eskbanker

What's your income from each different source?

vikkimcd

£15,300 employment + (PIP ?) + approx. £900 savings interest + (stuff in ISA which does not count?)

I am wondering whether I can move some from the ISA to the higher rate savings, if I have not gone over.

PLUS, separate issue - I accrued over £3k last year via inheritance savings that passed to me (last year my employment was the same, but had no ISA or the £900).

eskbanker

PIP is non-taxable so can be ignored, like ISAs.

As well as PSA there is also the starting rate for savings, of up to £5K, so your employment income uses all of your personal tax allowance of £12,570 and removes £2,730 of that starter rate, leaving unused allowances for savings of £2,270 plus £1K PSA, which will accommodate your £900 interest with up to £2,370 headroom.

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

Bigwheels1111

just make sure your savings do not exceed £6000.

As this will cause issues with benefits, council tax, rent etc.

LITRG

Hi Vikkimcd. You might find our guidance on the personal savings allowance useful.

Personal savings allowance | Low Incomes Tax Reform Group

Hope this helps!

FrugaiMacDugal

'' I am wondering whether I can move some from the ISA to the higher rate savings, if I have not gone over.''

Why move it from an ISA, which is tax free?

What rate are you getting now and thinking of moving to?

Here's how to find out what's best.

Might I still be better off in normal savings even if I pay tax?

Currently, the answer is no. However, if you did want to check here's a simple method to help you compare. Take the rate on the ISA you're looking at and multiply it by:

- 1.25 if you're a basic-rate taxpayer
- 1.66 if you're higher-rate taxpayer
- 1.82 if you're a top-rate taxpayer

The result of that sum is the rate you need to get on normal savings for it to be the winner. If normal savings don't pay more than that, then you're better off in the cash ISA.

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/81871102#Comment_81871102

It would be quite an achievement if OP is managing to earn £900 in interest from less than £6K, as that would need to be at >15%, even ignoring ISAs!