Tax on saving

[ohmydays37]

My sister received a £15k inheritance gift a few years ago.

It's been sat in her savings account gaining minimal interest. She doesn't work or claim any benefits - although her husband works full time @£50k per year and has some of his own savings in his account.

She's is unsure if she will get taxed on her savings over £12500 personal allowance.

Any advice thanks

If you don't use your personal allowance at all, you can use all of it for interest. But 15 grand isn't going to get you anywhere near that amount of interest anyway so the point is somewhat moot? 15 grand is about £60 a month depending what account you have so she's nowhere near needing to declare tax.

The answer to these questions can usually be found on the HMRC website.
https://www.gov.uk/apply-tax-free-interest-on-savings
Also, get her to move it to a better rate, or an ISA!

You don't get taxed on the savings themselves but the interest earned. If it's not in a high interest account she's nowhere near paying tax.

He tax affairs are independent of DH's although if he isn't a higher-rate tax payer she can transfer 10% of her tax-free allowance to him.

If her only income is from savings she can earn up to £5,000 per year in interest before paying any tax (e.g. having £100,000 in a 5% interest account) - she is nowhere near this.

The personal allowance is based on the amount of income you receive each year (eg salary, interest on savings accounts, share dividends) not the amount you have in savings.

Plus, at present, there's an extra tax-free allowance for interest on savings which means you don't pay tax on interest up to £1,000 (£500 for people in the higher tax brackets).

So she won't be paying any tax.

Why is it only gaining 'minimal interest'. She should be getting 5% pa, which is £750 so not to be sniffed at.

However, she has a £1000 pa personal savings allowance and I think that she can actually earn more interest than this as she has no income, so no, she won't pay tax on her savings.

Thanks everyone.

I think she wanted access to it in an emergency instead of putting it in something she needs notice to get it out.

She actually hasn't realised it has been that long.

Your sister can put her money into an ISA, up to a maximum of 20k per tax year & all of it, including the interest is tax free

Or into a JISA if she is under 40

Or up to 50k maximum into Premium Bonds & all winnings are tax free

Or £2880 into a SIPP private pension per year & if she is not working, she will get 20% tax rebate added free.

Or

She can do a combination of all the above !