starting rate band for savings and PSA

[jamesfairclear]

Hello,

After reading HMRC's post on the starting rate band for savings calculating income tax https://www.gov.uk/apply-tax-free-interest-on-savings/print it is not clear as to how this allowance and the Personal Savings Allowance are jointly applied in calculating income tax for year end April 24.

For example how would income tax be calculated for the following:

1. Net income from self employed trading £5,000, bank interest £10,000

2. Net income from self employed trading £10,000, bank interest £5,000

3. Net Income from self employed trading £10,000, bank interest £10,000

[D&C]

You need to remember you can only use these two 0% tax bands after the Personal Allowance has been used. And the Personal Allowance can be allocated in whichever way gives the lowest liability.

Also, the answers below assume that the person involved has NOT applied for Marriage Allowance and your reference to net income is the taxable profit figure.

1. There would be no tax payable and the savings nil rate band (aka PSA) would not be used at all.

2. Same as 1.

3. Tax due would be £286. Unless you were Scottish resident when it would only be £271.70