Declaring Bank Interest on Self Assessment

DeeJayTee

It is my understanding that the first £1000 of interest is 'tax-free'. Yet, when entering my small amount of interest (c.£250) into my Self Assessment, it is taxed.
How can I avoid this?

SiliconChip

Depends on what tax band you are in:

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

https://www.gov.uk/apply-tax-free-interest-on-savings

DeeJayTee

Basic rate taxpayer.

jem16

https://forums.moneysavingexpert.com/discussion/6671063/declaring-bank-interest-on-self-assessment

Technically it’s not tax-free but taxed at 0%.

What makes you think it’s being taxed? What does your calculation show?

DeeJayTee

https://forums.moneysavingexpert.com/discussion/comment/82022717#Comment_82022717

The interest is shown on the tax calculation, added to the taxable sum and taxed.

Isthisforreal99

https://forums.moneysavingexpert.com/discussion/comment/82022742#Comment_82022742

But, as already asked, at what rate?

If you are a basic rate taxpayer it should show as £250 0%.

sherlock228

https://forums.moneysavingexpert.com/discussion/comment/82022742#Comment_82022742

yes, all interest not held in an ISA is taxable income, however, for a basic rate taxpayer the first £1,000 of it is taxed at 0%

Find the section called "tax return calculation" and therein the section which shows "How we have worked out your income tax"
there will be a line showing your interest figure (c£250 in your case) and next to that will be the value 0%. In the total column to the right of that it will show £0.00

jem16

https://forums.moneysavingexpert.com/discussion/comment/82022742#Comment_82022742

it is added to your total income but if you scroll further down it will show £250 taxed at 0%.