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Posted Wed, 14 Feb 2024 13:55:38 GMT by
Hi, I'm new to these forums so please be gentle. We live in Scotland as Im sure you all know have different tax thresholds for incomes than the rest of the UK. My total income which includes income and interest on savings will put me above the £43000 threshold and pay 41% tax. My question would be this, the annual interest on my savings would be around £5000 which would bring my overall income to around £45000 this year. Would I only pay 41% on the £2000 over the £43000 threshold or because my interest took me over the threshold would I pay 41% on the whole £5000 savings instead? Even reading this back Im sure I could word it better but I hope you all can get the gist and give me some advice? Many thanks in advance.
Posted Mon, 19 Feb 2024 15:24:31 GMT by HMRC Admin 19

Untaxed savings interest is taxed using the same tax bands for the UK.

In your example if your employment income was £40,000 and savings interest of £5000 then you would not reach the 41% for the 2022 to 2023 tax year on your employment income. On the savings income you would receive £1000 tax free and pay tax at 20% on the £4000 balance. 

Thank you.

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