Personal Savings Allowance calculations when close to Basic Rate Limit

I'm interested to know what happens if Profits+Interest are on/near the boundary of the Basic Rate Limit. My questions are as follows: 1. If for example Taxable Profits+Interest come to exactly £37,700 (after Personal Allowance), with Dividend Income stacked on top of that, then does the taxpayer still get the full Personal Savings Allowance of £1,000? 2. The name Personal Savings Allowance suggests it would be deducted from total income, but it's not really is it? It's a Nil Rate Band so it's still counted as an "income" and therefore am I right in thinking that in this scenario the Profit+Interest is still £37,700 and ALL the Dividends would be charged at Higher Rate 40% ? The other possibility is that deducting the £1,000 Personal Savings "Allowance" would leave a £1,000 space in the Basic Rate Band for the first £1,000 of Dividends to be taxed at Basic Rate, but I suspect that's incorrect :o) 3. If for example Taxable Profits+Interest comes to £37,701, i.e. £1 over the Basic Rate Limit, then I'd like to know exactly what happens to the Personal Savings Allowance. Is it instantly slashed to £500 - meaning that suddenly for £1 over the limit you get charged 20% tax on the now disallowed £499 under the Basic Rate Limit and 40% tax on the offending £1? That would represent a penalty of £100.20 for being £1 over the limit! Or do you lose £1 of PSA for every £1 over the Basic Rate Limit which would effectively phase the allowance down to £500 in a fairer manner? Many thanks, Tony.

Hi Tony Heath,
1. If you go into the higher rate of tax with your income, taxable profits plus untaxed, interest plus dividend income, then the personal savings allowance will be £500.
2. No, the dividend income would be tax at the higher rate.
3. Yes if higher rate then the personal allowance would be £500 rather than £1000. 
Thank you.