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  • FIRST POST
    • chi2000
    • By chi2000 13th Jan 18, 4:52 AM
    • 9Posts
    • 0Thanks
    chi2000
    Personal savings allowance when unemployed?
    • #1
    • 13th Jan 18, 4:52 AM
    Personal savings allowance when unemployed? 13th Jan 18 at 4:52 AM
    Hi all,

    Can anybody confirm what the maximum amount of savings interest an unemployed person can earn before paying tax?

    Is it the same £1000 like an employed person or are they able to earn more tax free interest on savings if it's there only source of income?

    Hope that makes sense.

    Thanks.
Page 1
    • Eco Miser
    • By Eco Miser 13th Jan 18, 6:28 AM
    • 3,444 Posts
    • 3,234 Thanks
    Eco Miser
    • #2
    • 13th Jan 18, 6:28 AM
    • #2
    • 13th Jan 18, 6:28 AM
    £17500, plus any ISA interest, less any other income, such as benefits, pensions, casual earnings.
    This is made up of
    £11500 Personal Allowance,
    £_5000 Starting Rate for Savings, and
    £_1000 Personal Savings Allowance.
    Eco Miser
    Saving money for well over half a century
    • Dazed and confused
    • By Dazed and confused 13th Jan 18, 8:45 AM
    • 2,629 Posts
    • 1,258 Thanks
    Dazed and confused
    • #3
    • 13th Jan 18, 8:45 AM
    • #3
    • 13th Jan 18, 8:45 AM
    Being employed or unemployed really makes no difference, all that matters is the amount of income.

    Chances are most unemployed won't be able to benefit from the Personal Savings Allowance simply because they have insufficient income to be able to use it.

    As Eco Miser says you have the Personal Allowance first then the starter rate for savings income (which is 0% tax rate) so the Personal Savings Allowance (another 0% tax rate, not actually an "allowance") only applies if you have income over £16500 in the current tax year.
    Last edited by Dazed and confused; 13-01-2018 at 8:48 AM.
    • chi2000
    • By chi2000 13th Jan 18, 12:14 PM
    • 9 Posts
    • 0 Thanks
    chi2000
    • #4
    • 13th Jan 18, 12:14 PM
    • #4
    • 13th Jan 18, 12:14 PM
    Thank you both for replying.

    So just as an example if an a person has 1 million pound in a savings account and get an interest rate of 1.4% they would earn £14,000 in interest and not pay any tax. Would this be correct?
    • le loup
    • By le loup 13th Jan 18, 12:27 PM
    • 3,821 Posts
    • 3,786 Thanks
    le loup
    • #5
    • 13th Jan 18, 12:27 PM
    • #5
    • 13th Jan 18, 12:27 PM
    It is exactly correct.
    • firestone
    • By firestone 13th Jan 18, 12:48 PM
    • 246 Posts
    • 106 Thanks
    firestone
    • #6
    • 13th Jan 18, 12:48 PM
    • #6
    • 13th Jan 18, 12:48 PM
    Thank you both for replying.

    So just as an example if an a person has 1 million pound in a savings account and get an interest rate of 1.4% they would earn £14,000 in interest and not pay any tax. Would this be correct?
    Originally posted by chi2000
    in that example i think they are retired not unemployed
    • soulsaver
    • By soulsaver 13th Jan 18, 2:32 PM
    • 1,706 Posts
    • 684 Thanks
    soulsaver
    • #7
    • 13th Jan 18, 2:32 PM
    • #7
    • 13th Jan 18, 2:32 PM
    Thank you both for replying.

    So just as an example if an a person has 1 million pound in a savings account and get an interest rate of 1.4% they would earn £14,000 in interest and not pay any tax. Would this be correct?
    Originally posted by chi2000
    ...if no other income.

    And beware the tax trap between £17.5k and £22.5K where you probably pay 40% tax, effective.

    And currently effectively losing £35k pa to inflation.
    • grey gym sock
    • By grey gym sock 14th Jan 18, 2:03 AM
    • 4,383 Posts
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    grey gym sock
    • #8
    • 14th Jan 18, 2:03 AM
    • #8
    • 14th Jan 18, 2:03 AM
    And beware the tax trap between £17.5k and £22.5K where you probably pay 40% tax, effective.
    Originally posted by soulsaver
    well, that doesn't happen if all your income is interest.

    only if you have something like:
    £11.5k salary + £6k interest; on which, no income tax is due.
    and then your salary goes up by £5k; now, £2k income tax is due, which is an effective rate of 40%.
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