Help! Personal Savings Allowance

[winnie165]

Hi

I am having a bit of trouble understanding how the Personal Savings Allowance works as this is the first year in a long time that I have put money in to savings accounts. I have put £19.5k in a 1 year fixed bond that is due to mature in Dec this year and payout £965 interest at the end of the term. In my current account I keep around 3/4k in, which gives me around £5 pm interest, so from April 2024 to March 2025 that should be around £60 interest. I feel like the approx 3.5k I have in a current account could be working harder for me, but I do want to keep that money as instant access. I was about to open a Lloyds Club Lloyds Monthly Saver as if I save the max amount in that each month (£400) it will pay £150 interest in a years time. Would that £150 be taxed though, as the fixed rate bond is almost maxing out the PSA on its own? I am also wondering how do they know you have gone over £1k in interest, do you have to declare it?

*I do also have money in an ISA paying out just under £50 pm interest atmo and we also have a mortgage.

Can you move more money into the isa?

Assuming you are a basic rate tax payer then the period in which your interest is earned needs to be declared, if you reach £1k.

HMRC uses information provided directly to them from banks and building societies, but the onus and responsibility is still on you to declare this as the taxpayer.

Isas are tax free so maximise those as much as possible. You could put some of your current account float in premium bonds - the prizes are in lieu of interest, and there may not be any, but they are also tax free and more or less instant access.

@eggbot I could but we are doing some work on our house at the moment and plan to do a big holiday later this year, so I'd prefer to keep that money easy access

@FriendlyNeighbourhoodAccountant when the fixed rate bond pays out in Dec 24 would I need to do a declaration at the end of that tax year, in April 2025? And it would be declaring any interest paid to me between April '24 and March '25 (not incl the ISA)?

@onemoremile will look in to premium bonds, thank you

Sorry yes, basic rate tax payer

Yes that's right.

@FriendlyNeighbourhoodAccountant thank you

Have you factored in the starting rate for savings?

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

Yup, anything over £1000 in interest with the tax year will be taxed as if it were income.

If you're a 40% taxpayer then it's anything over £500.

Thanks all, will probably move most of what is in my current account in to an easy access ISA as I still have some ISA limit left for this tax year.

@WuTangGran I earn over that, but thank you