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Where Taxpayers and Advisers Meet

Personal Allowance and Personal Savings Allowance

tony_m
Posts: 2
Joined: Thu Apr 16, 2020 9:36 pm

Personal Allowance and Personal Savings Allowance

Postby tony_m » Thu Apr 16, 2020 9:52 pm

Hi,

A newby question if I may as I am totally confused, I am currently on a higherate which by what I have been reading is making use of my personal allowace in full (if I understand correctly).
No other incomes, pensions, benefits or anything else. Standard salary tax code.

Been reading about the Personal Savings Allownce however cant understand if its already included on the personal allowance.

So my question is, if I open a savings account (which should give me a £500 of PSA), do I still have to fill any return tax form because of it since the PA is fully used?
(the interests I reckon will be around 10£ year)

Thanks

D&C
Posts: 37
Joined: Mon Nov 25, 2019 11:35 pm

Re: Personal Allowance and Personal Savings Allowance

Postby D&C » Fri Apr 17, 2020 7:41 am

Your list is somewhat contradictory, you start by saying,
No other incomes, pensions, benefits or anything else. Standard salary tax code.
But then ask about the PSA, which relates to income from taxable interest.

Anyway to set your mind at rest the Personal Savings Allowance is not actually an "allowance" at all. It is a 0% tax band. So if you are a higher rate taxpayer (with any savings interest taken into account in establishing your tax rate) then the first £500 of your taxable interest will be taxed at 0%, the savings nil rate (aka PSA).

You do not need to complete a tax return for £10 (ten pounds) worth of interest. But if you need to fill in a tax return for some other reason then you would have to declare the £10 on it. There are some niche circumstances where £10 of income taxed at 0% actually makes your overall tax bill increase slightly.

tony_m
Posts: 2
Joined: Thu Apr 16, 2020 9:36 pm

Re: Personal Allowance and Personal Savings Allowance

Postby tony_m » Fri Apr 17, 2020 8:40 am

Brilliant, got that :)
Thanks very much


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