Tel: 01736 795753
This email address is being protected from spambots. You need JavaScript enabled to view it.

Starting rate of Income Tax for savings

Source: HM Revenue & Customs | | 21/10/2020

In the current tax year, anyone with taxable income of less than £17,500 will have no tax to pay on their savings income - interest received. This figure is calculated by adding the £5,000 starting rate limit for savings (where 0% of the interest is taxable) to the current £12,500 personal allowance. However, this £5,000 starting rate limit for savings will be reduced by £1 for every £1 of non-savings income in excess of £12,500. Accordingly, when non-savings income amounts to £17,500 all savings income will be taxable.

There is also a Personal Savings Allowance (PSA) which means that for basic-rate taxpayers the first £1,000 interest on savings income is tax-free. For higher-rate taxpayers the tax-free personal savings allowance is £500. Anyone earning over £150,000 does not benefit from the PSA.

Interest from savings products such as ISA's and premium bond wins do not count towards the limit. Taxpayers with tax-free accounts and higher savings can continue to benefit from the relevant PSA limits.

Banks and building societies no longer deduct tax from your account interest as a matter of course. Taxpayers who still need to pay tax on savings income will need to declare this as part of their annual Self-Assessment tax return.

Taxpayers that have overpaid tax on savings interest can submit a claim to have the tax repaid. Claims can be backdated for up to four years after the end of the current tax year. The deadline for making claims for the 2016-17 tax year is 5 April 2021.



Search Archive


Latest News

HMRC’s Annual Tax Summary
02/12/2020 - More...
The Annual Tax Summary is a document provided by HMRC that provides details on the tax you pay and

Pay January tax by instalments
02/12/2020 - More...
The deadline for submitting your 2019-20 Self-Assessment tax returns online is 31 January 2021. You

Confirmation of Minimum Wage increases 2021
02/12/2020 - More...
The Chancellor used the recent Spending Review to confirm that increased National Minimum Wage and

Search

Our Address

Greenwood Wilson
The Old School
The Stennack
St Ives
Cornwall
TR26 1QU

Contact Us

tel: 01736 795753
fax: 01736 798642
This email address is being protected from spambots. You need JavaScript enabled to view it.

Newsletter

With our newsletter, you automatically receive our latest news by e-mail and get access to the archive including advanced search options!

» Sign up for the Newsletter
» Login