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Personal tax allowance on savings interest

5 replies

Givemethenight · 23/04/2021 01:08

I can see that the personal tax allowance for this year is £12,570. If a person doesn't work and their only income is interest from their savings does the same personal tax allowance apply to them? Thanks.

OP posts:
CarmelBeach · 23/04/2021 01:18

Yes it does.

Givemethenight · 23/04/2021 01:26

Thank you.

OP posts:
Billandben444 · 23/04/2021 06:55

You get an additional savings allowance if you're on a low income. This was from HMRC website about 2 years ago.

Personal tax allowance on savings interest

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BarbaraofSeville · 23/04/2021 07:07

There's also a separate tax allowance on savings. If you are a non or standard rate tax payer, its £1000.

Which is irrelevant to just about everybody, as you'd have to have about £100k+ in cash savings to earn that much interest right now.

But seeing as cash savings being able to generate a meaningful income has not been a thing for over a decade, you should be thinking differently these days, fixed rate products, maximising your premium bond allowance and then investing some of the money you don't need in the short term.

BarbaraofSeville · 23/04/2021 07:24

Oh, just seen your other thread in Money Matters.

On that amount of money, there could be a taxable interest due and it could be the case that your cousin should be declaring the interest he earns via self assessment (I do not know that this is the case, but it's worth checking, because if he's liable for self assessment and doesn't do it, he could get fined).

Or it could be that, due to his chaotic lifestyle, that his money is languishing in accounts paying virtually no interest and it's all been below the savings allowance, so no tax to pay.

If you're helping him sort himself out a bit, it might be worth him seeing a financial planner, to make his money work for him giving him a structured income and some growth.

OTOH, there's a lot you can do these days that probably makes this unnecessary. I have a link saved that people keep posting that's really good for this:

flowchart.ukpersonal.finance/

One thing for him to consider is that he needs to spread his money around, both to maximise whatever growth he can get, and also because if a financial institution goes bust you are only protected up to £85k.

On a personal/health level, might he benefit from moving to some sort of supported living facility?

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