I Have Done A Very Stupid Thing
ChatterBank0 min ago
Do building societies deduct tax when paying interest on savings accounts ?
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For more on marking an answer as the "Best Answer", please visit our FAQ.Yes, basic rate taxpayers can earn £1,000 in interest without paying tax.
However. if you have a particularly low income, you can earn up to an additional £5,000 in interest tax free.
If your other (pay or pension) income is £12,570 or less you can take advantage of the full £5,000. If your other income is £17,570 or more you have no additional interest allowance. If it is somewhere between the two, the £5,000 is reduced by £1 for every £1 above £12,570 you have in other income.
As an example, if your other income is £16,000 your additional tax free inerest allowance is reduced by (£16,000 - £12,570) with equals £3,430. So your additional tax free allowance is (£5,000 - £3,430) which equals £1,570. This is in addition to the normal tax free aamount of £1,000, so you can earn £2,570 in interest without paying tax.