Tax free annual savings amount

[Muddle2000]

Has been increased from 1000 quid for average income tax payers to 5000 pa tax year 2023 to 2034 Bank told us but no guarantee it will apply in the future of course

Nb this is the amount of interest you can receive from savings tax-free.
If you have savings getting 5% interest then you can have savings of up to £100,000 and the interest you receive is not taxed.

This means that ISA accounts are pointless for most people - unless you are in a position to have £100,000 of your capital assets in savings (obviously less if you have a higher interest rate, but in that ballpark) then any account is an ISA and so you might as well just seek out the highest interest rate you can. Even if you go over the limit you'll only pay tax on interest received over £5000 so if you have £120,000 in a high interest accout paying 6% so giving you £7,200 income from interest, you'll pay £440 tax which means you are still better off than if the same £120,000 was in an ISA paying only 5.5% interest or less.

What about higher rate tax payers?

Has this been formally announced anywhere?

No it hasn't, Personal Savings Allowance is still £1,000 or £500. However there is a starting savings rate which starts at £5,000 and tapers off as your income rises above your personal tax allowance (about £12,500, don't know exact figure).

So if your income is less than £12.5k your tax-free income from savings can be up to £6k (5k + 1k). As your earnings rise above £12.5k the 5k tapers off and becomes zero when you reach £17.5k. Then you're left with the £1,000 or £500 Personal Savings Allowance.

https://www.moneysavingexpert.com/savings/personal-savings-allowance/

This is not correct.

The tax free savings allowance is still £1,000 for basic wage tax payers, £500 for higher rate and £0 for additional.

The starting rate for savings is £5,000 - but this is just if you have other income is below £12,570. You don’t get any starting rate for savings if your income is above £17,570 (and the £5,000 reduces by £1 for every £1 of other income between those two thresholds).

See the link below, and take tax advice from an accountant, not your bank.

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

Oh. I missed that bit.
Sorry my advice above is wrong (although still true on a smaller scale for a savings limit around the £20,000 mark)

@YireosDodeAver - you now need only £20k in savings getting 5% interest to be at the £1,000 tax threshold. ISAs have become beneficial again.

And only true for cash ISAs. If you have a stocks and shares ISA, then there’s unlikely to be a better tax environment.

Yes Yireos my post was not clear
You can have 5k INTEREST on savings before you pay tax not 5 k in savings Sorry could be misleading

No, this is still wrong.

You can have either £5,000, £1,000, £500 or £0 in savings interest tax-free depending on your other income.

Most people pay income tax at 20% and therefore are allowed £1,000 with special allowances if you earn less than £17,570 in other income.

Posterior this is the bank that supports St James Place ! Agree with u totally This is wrong advice Banks will say anything to get your money at the moment

If a bank is giving incorrect advice I suggest they are reported to the FCA.

Though I wonder if the bank has got wind of what will be in the autumn statement? Though I would be surprised that the tax free allowance would go up that much.

The only reason I can think of for them doing this is to avoid the administrative headache and bad publicity associated with lots of relatively small savers suddenly getting a bill/needing to do a tax return in the run up to an election

Yes, I can see the PSA being increased. With interest rates as they are, numerous voters taxpayers will this year be liable for tax on their interest. Many won’t realise it until they start getting underpaid P800 tax calculations.

I heard there was something about ISA allowances being announced in the autumn statement but I can see the benefit of increasing the personal savings allowance as you currently will exceed it on under £20k of cash savings or £10k if a higher rate taxpayer and there will be millions in this position so perhaps a lot of extra work for HMRC?

@PosteriorPosterity
It‘s not either £5000 or £1000, you get both (with the £5000 depending on your income)

Correct - apologies I was trying to stress the point that £5,000 wasn’t the new limit for what was £1,000 as well as rushing out of the door to go to a meeting to give tax advice and wasn’t as clear as I would normally be!

St James’ Place is openly known in the industry to be the worst ‘big name’ investment adviser/wealth manager. I’d steer all my clients away from them, they can allegedly be sharky in getting your cash and a quick google doesn’t show great reviews.

I have cancelled my DD to Santander Investment rubbish

I am glad I did this thread as millions of people may be liable for more tax possibly

But your posts don't really make any sense and may not be accurate for people unless they are very low earners or the PSA is substantially increased?