Andrew Richards

I am trying to work out whether a PSA or £500 or £1000 applies to my savings, based on my rent-a-room income and the impact this RaR income has on my tax band (basic or higher). My income exceeds the £17,570 threshold to be eligible for the starting rate for savings. I understand that the PSA depends on my tax band (basic or higher), which per HMRC guidance is determined by adding "all the interest you’ve received to your other income". However, HMRC guidance HS223 on the RaR scheme states that the first £7,500 of rental income is exempt from tax ("If your gross receipts are less than £7,500 (or £3,750) you’re automatically exempt from tax on that income"). So when working out the "other income" for the purposes of determining whether I fall into the basic or higher rate tax band for PSA purpose, can I ignore the 1st £7,500 of income received through the RaR scheme?