Personal savings allowance

[PurpleMoonlight]

I've been looking into this for a colleague. What a typical clusterfk by the Government.

If you are a basic rate tax payer you get a £1000 allowance, if you are a higher rate tax payer you only get £500. The theory being both get a £200 tax saving,

But, the interest you receive is income and itself can carry you into the higher rate threshold. So £1 into the higher rate band can end up costing you £100 in tax!!!

[PurpleMoonlight]

Does gift aid have the effect of reducing your income for HMRC purposes though?

[PurpleMoonlight]

rockin said:

And I'm not the sharpest tool in the shed, but........ with interest rates at c.1% you need a cool 100,000 of cash savings to get anywhere near this "problem".

That's true, but PPI refund interest is 8%.