Tax Free Savings

[Happy Jim]

If I earn £0 (Zero) from employment next financial year how much of my savings interest can I have before tax kicks in?

Personal Tax Allowance = £12,570
Starting savings rate = £5,000
Personal Savings allowance= £1,000

Is it all 3 combined, or, only the last 2?

Thanks
Jim


PS - I may be having a blond moment...apologies

[KenC]

£18,570, all three.

[Happy Jim]

Perfect! Thanks

Jim

[BlackR8]

KenC said:

£18,570, all three.

Just as an extension to this scenario.

If you earn £10,000 on savings interest, then how does the saving allowance work in this case?

Is it £18,570 tax free and the £4000 additional savings interest charged at 20% tax?

or

As your total earning for the year is now £22,570 then the rule where every pound over a your Personal Allowance erodes your savings allowance kicks in and you start losing the tax benefits?

[KenC]

Sorry, I don't understand the question.

If earned income is under £12,570 you have the balance of this personal allowance available for tax free savings plus £1,000 plus £5,000.

If earned income is between £12,570 and £17,570 the personal allowance has been fully used, the £5,000 is reduced £1 for pound so and you have the balance (or £0) plus £1,000.

[AdamV12V]

BlackR8 said:

KenC said:

£18,570, all three.

Just as an extension to this scenario.

If you earn £10,000 on savings interest, then how does the saving allowance work in this case?

Is it £18,570 tax free and the £4000 additional savings interest charged at 20% tax?

or

As your total earning for the year is now £22,570 then the rule where every pound over a your Personal Allowance erodes your savings allowance kicks in and you start losing the tax benefits?

Have a read of the HMRC webpage on it - its fairly clear snd has some examples set out too.

https://www.gov.uk/apply-tax-free-interest-on-savi...

[BlackR8]

Thanks for the replies, ok I think I got it.

So its only earned income that counts against your savings allowance if you go over the £12,570. So as long as 'earned' income stays below or at that amount you always retain the £6000 tax free on savings interest regardless of how much interest you earn.

[KenC]

That is correct. Also note that Pension income, whether private or government sourced, is also counted as earned income.