Self Assessment and Personal Savings Allowance

I've filled out my latest Self Assessment and I'm a little confused with regards Interest paid from UK Banks/BSs, I was my assumption that tax payers on the Higher rate tax band receive a personal savings allowance of £500, however, I don't think this is being taken into account when creating the SA calculation. I created one without entering any interest values and the calculation returned with a tax repayment per my own calculations. I then amended the original by adding in interest received (lower than £200 so under £500 allowance), however, the calculation result suggested I owed more money. How can this be? What am I missing?

Hi,

On the calculation there should be a section which will say interest taxed at 0% rate and the amount should be there if it is £500 or less.

Thank you.

Ok - I see that. The amount is displayed as £0.00 tax liability. Savings interest from banks or building societies, securities etc. Higher rate band at nil rate £90.00 x 0% £0.00 However, the amount I'm expected to pay back is increased. HICBC is higher because it's pushing up the 'Total income received' amount and therefore the 'Total income on which tax is due' value is higher. So for example, £90 interest will push up my 'Total income received' amount and 'Total income on which tax is due' by £90. In turn, this means I'm expected to pay £19 extra on the HICBC. So even though it should be tax free as I have £500 allowance, I'm still having to pay back more. Is this really correct?

@Mark Foster Just because the interest is taxed at 0% (PSA isn't actually an "allowance") doesn't mean your overall liability won't increase. As taxable interest forms part of your adjusted net income you might have a larger taper on your Personal Allowance or a High Income Child Benefit Charge might be larger than it would be without the interest.

Hi Mark Foster,

You would still be entitled to the allowance but the whole amount forms part of your taxable income for HICBC,

Thank you.

Hi HMRC Administrator, I am expecting to have an annual salary of GBP 10,000 and earnings from interest on savings in the total sum of GBP 20,000 in the current financial year. I have no other income apart from the above. Grateful to know if my following understanding is correct - (1) There should be no tax on my salary income as it is below the GBP 12,570 threshold. (2) The income tax allowance (GBP 12,570) and the starting rate of saving allowance (GBP 5000) could be applied to the total sum of GBP 20,000 from interest. This will leave an amount of GBP 2,430 (20,000 - 12,570 - 5000) which will be subject to 20% of tax payment. Please kindly advise if the above understanding is correct.

@ BPS WONG I'm not HMRC but no, that isn't correct. Your employment will use 10k of the 12570, so 12570 won't be available to be used against the savings interest, only 2570 will be available.

Hi BPS WONG,
The remainder of your Personal Allowance which is not used by your salary would be used first.
Then the Starting rate of up to £5,000 and then the Personal Savings Allowance of up to £1,000:
Tax on savings interest

Hi, I paid my self assessment for 2022-2023 in April of this year. On the app, it says that I have nothing to pay and that I am in credit to the same value that my self assessment bill is. It says that my next payment will be paid by 31 January 2024. since I've already paid this from my bank account, will this automatically be paid off from my HMRC account on 31/1/24?

Hi StewartSA,

If the amount is on your record, it will automatically be allocated closer to the time.

Thank you.