Skip to main content

This is a new service – your feedback will help us to improve it.

Posted Fri, 19 Apr 2024 08:26:16 GMT by tommy leung
Good morning, I would like to ask for how to do the tax calculation. For example, I only earn interest from bank and no other income or pension, and the annually interest amounted to GBP 5,5270. I want to know whether the whole amount is taxed on 40% or the first GBP 5,0270 is taxed on 20% and the remaining GWP 5,000 is taxed on 40%. Your answer to the question is much appreciated. Thanks.
Posted Tue, 23 Apr 2024 11:51:08 GMT by Tony Hall
You have a Personal Savings Allowance of £1000, so not taxed on first £1000
Posted Tue, 23 Apr 2024 11:52:52 GMT by Tony Hall
If that is your only income, virtually guaranteed to be below your Personal Tax Allowance, so will not pay any tax at all
Posted Tue, 23 Apr 2024 15:06:26 GMT by tommy leung
Thank you for your reply. I want to know if bank savings interest is my only income. And the amount is in the higher rate tax band. I would like to know if the interest on savings is taxed in the same way as income, i.e. after deducting all available allowances, the assessed amount is calculated at the basic rate of 20%, up to £50,270, and the remaining balance is calculated at 40% for the higher rate. Thank you.
Posted Tue, 30 Apr 2024 09:33:25 GMT by HMRC Admin 8
That is correct.
Thank you.
Posted Wed, 01 May 2024 06:09:31 GMT by HMRC Admin 25
Hi tommy leung,
If your bank interest is your only source of income, the first £12,570 will be tax free, after your tax free allowance is applied.
After this, the Personal Savings Allowance allows an additional £1000 of bank interest to be received tax-free.
The next £37,700 of your income will then be chargeable at the basic 20% rate. The remaining £4000 will be chargeable at the 40% higher rate of tax.
Thank you. 

You must be signed in to post in this forum.