Postby D&C » Tue Apr 26, 2022 7:25 pm
ISA's generate tax free savings interest.
Virtually all other interest is taxable however most people don't pay tax on it unless their total taxable income exceeds £18,570. This consists of the Personal Allowance, savings starter rate of tax (upto £5,000 taxed at 0%) and savings nil rate of tax (upto £1,000 taxed at 0%).
Assuming your earnings or pension income have used your Personal Allowance and the savings starter rate of tax then you may see the benefit of the savings nil rate of tax in your tax code.
For example someone with earnings of £20,000 and untaxed interest of £1,200 would usually have a tax code deduction of £200 relating to the interest.
The above is for someone who isn't Scottish resident for tax purposes.
If your taxable income is £17,570 or less than you cannot benefit from the savings nil rate (confusingly known as the Personal Savings Allowance)