Starting rate of Income Tax for savings
22/10/2020

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.


About Us

We are qualified and experienced medic accountants and business advisors who have been in general practice for over 20 years having helped medic & dentist clients in meeting their aims of maximizing profits and both retaining and building on the rewards of their hard work.

Newsletter

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

» Sign up for the newsletter
» Login

Contact Us

Medic Accountants
Cromer Business & Innovation Centre
North London Business Park
Oakleigh Road South
London N11 1GN
Ph: + 44 (0) 207 183 0034
Fx: + 44 (0) 207 100 1082
Registered in Companies House England & Wales

Birmingham office
Cambrai Court,
1229 Stratford Road,
Hall Green,
Birmingham,
B28 9AA
Ph: 0121 285 4550
Fx: 0121 285 4551

Copyright © 2018 - Medic Accountants company. All rights reserved.  Website Privacy Policy