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Posted Wed, 06 Dec 2023 16:13:56 GMT by
Hi, I'm a little confused how tax on interest on savings is worked out. Does the interest on savings get added to total taxable income? Where do you adjust the £500 tax free on savings interest you receive (if you're in the higher tax bracket)? For e.g. if i earned approx ~£92000 (all adjusted for benefits and pension) and then another £4000 with savings interest. Would my taxable income be £96,000? Where does the £500 relief on savings interest get added? Is this added to the personal allowance so if my personal allowance is £12570, my personal allowance should be adjusted to £13070?
Posted Tue, 12 Dec 2023 10:53:51 GMT by HMRC Admin 10 Response
Hi
Yes your taxable income would be £96,000.
The savings allowance of £500 will be taken into account in your calculation when it shows how the tax has been calculated.
If the interest is in your code then the taxable interest in the code will be the gross minus the savings allowance. 

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