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Posted Mon, 02 Oct 2023 19:28:00 GMT by David H
For basic rate taxpayers the tax free allowance on savings interest is £1000, however I have read somewhere that for lower earners, the allowance could be £5000. Can anyone confirm that and if correct what are the qualifying factors for the £5k allowance, thanks
Posted Thu, 12 Oct 2023 08:05:24 GMT by HMRC Admin 20 Response
Hi David H,

Customers can use their Personal Allowance to earn interest tax-free if they haven't used it up on wages, pension or other income. They may also get up to £5,000 of interest tax-free - this is the starting rate for savings. The more you earn from other income, the less your starting rate for savings will be.
Customers will not be eligible for the starting rate for savings if their other income is £17,570 or more in 2023-24- that's the Personal Allowance £12,570 + £5,000.
The starting rate for savings is a maximum of £5,000. Every £1 of other income above the Personal Allowance reduces the starting rate of savings by £1.
Example for 2023-24
Customer earns £16,000 of wages and gets £200 interest on savings. Personal Allowance £12,570 is used up by wages. The remaining wages £3,430 (£16,000 minus £12,570) reduces the starting rate for savings by £3,430. The remaining starting rate for savings is £1,570 (£5,000 minus £3,430). This is enough to cover the £200 interest so there is no tax to pay on this.

Thank you.
Posted Mon, 29 Apr 2024 14:19:50 GMT by simon Parry
Hi i have a pension of £8500 per year. However I have interest on savings which will be more than the allowed £1000. Will this mean that i will have to pay tax on any interest i earn over the £1000. I would be grateful for any advice
Posted Wed, 08 May 2024 15:12:21 GMT by HMRC Admin 20 Response
Hi simon,
In addition to the £1000 Personal Savings Allowance, your remaining tax free allowances will also be applied, and you may also benefit from the £5000 starting rate for savings.
Find out more here -  Tax on savings interest
Thank you.
Posted Mon, 20 May 2024 10:11:27 GMT by Nick
If you have no other income in a tax year am i right to think that the interest earned from a savings account can equal the standard Personal Allowance which is £12,570? In this case do you need to fill a self assessment form or notify HMRC? Thanks
Posted Fri, 24 May 2024 11:44:15 GMT by HMRC Admin 19 Response
Hi,

If the untaxed interest is more than £10,000 then you would need to complete a Self Assessment tax return.

Check if you need to send a Self Assessment tax return

Thank you.
Posted Mon, 24 Jun 2024 17:16:35 GMT by SONIA Oneil
Hi, I am currently on universal credit benefits and get an annual allowance of 9k. Do I have to pay tax on my savings interests thanks or what is my allowance
Posted Mon, 24 Jun 2024 20:43:53 GMT by David Corless
My wife is a non taxpayer as she has currently has no income but does receive interest on savings. We estimate she will receive £9000 in interest for 24/25. She also has a small SIPP and is planning to draw down £7500 in this current tax year. The combined SIPP income and savings income is less than the £17570 threshold of personal allowance plus starting rate for savings and therefore we believe no tax is payable on the interest. Is this correct? And with an annual income of £7500 what is the maximum amount of interest she can earn tax free? I understand that to be £11250 ((£18570 - £7500), the £18750 being made up of the PA + starting rate + £1000 allowance. Are my assumptions correct?
Posted Fri, 28 Jun 2024 06:29:52 GMT by HMRC Admin 25 Response
Hi SONIA,
Please refer to:
Tax on savings interest
Thank you. 
 
Posted Fri, 28 Jun 2024 10:26:29 GMT by HMRC Admin 25 Response
Hi David Corless,
Yes, you are correct.
Further guidance is here:
Tax on savings interest
Thank you. 
 

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