Savings Interest Tax Allowance.

[davebro3]

I think I earned more interest than the tax free £1000 allowance in 22/23 & 23/24 but have yet to receive any calculation/assessment of tax owed from HMRC.

They say the banks will report the interest to HMRC & no self-assessment tax return is required.

Has anyone here been charged tax on their interest?

[barry1010]

Newmod, people accrue large amounts of savings from inheritance, compensation for accidents and injury, selling property when one moves in with a partner, lottery wins...

[THECORBYLOON]

MISER, my previous post is correct.

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

"Cheryl: no income from work, has £20,000 of savings income

In this scenario, Cheryl will need to pay tax of just £286. As she has no earned income, the savings interest is mostly covered by a combination of allowances:

Personal allowance - the first £12,570 is tax-freeStarting savings rate - the next £5,000 is tax-free, so now £17,570 of the interest income is taxed at 0%Personal Savings Allowance - means the next £1,000 is tax-free, so £18,570 is taxed at 0%.

This leaves Cheryl with £1,430 of savings income which she will need to pay tax on. As she has no other income, this will be charged at the basic 20% rate, so she'll pay £286 in tax. "

[miser]

You can have income of less than £18570 and pay tax on savings interest so you are wrong

Example

Earnings from employment/pensions £10000

Savings income £7000

Although your total income is only £17000 you will pay tax on £1000 of savings income

[miser]

TCL

Sorry I am wrong and I apologise

 

 

 

[THECORBYLOON]

No need to apologize.

There's a lot of focus on the £1,000 and the £5,000 is sometimes mentioned but there's not many folk who'd be fortunate enough to have £18,570 in annual interest. 

[Maydup]

I don't understand what you don't understand @newmodelarmy

//I never understood how anyone earning less than £18750 could get £5000 of interest pa as that would mean having savings of over £100,000 (and that's on top of ISA savings).//

I would have thought it not that unusual for a person to have £100k + of savings but be retired on a pension. Maybe using the interest to top up their income.