Does interest reduce personal allowance even if covered by PSA?

Is someone earns £100,000 from a salary and £500 from bank interest, is their personal allowance reduced (by £500 / 2 = £250) even though the interest is covered by the Personal Savings Allowance (PSA) and therefore no tax is due on it? This means that individual would pay £100 additional tax (£250 reduced allowance at 40% marginal rate) compared to someone reminding £100,000 but with no bank interest, even though the PSA means the bank interest should be tax free. Is this correct?

Hi,
The reduction of the personal allowance is based on your adjusted net income, which includes all taxable income before any allowances are deducted. This means that even if the £500 bank interest is covered by the Personal Savings Allowance (PSA) and no tax is due on it, it still counts towards your adjusted net income so your personal allowances would be reduced. You can see guidance here: 
Personal Allowances: adjusted net income
Thank you.