I have a doubt and I'd like to pick your brain please. I'm trying to understand if the new Personal Saving Allowance (PSA) is in addition to the 0% Starting Rate on Savings (SRS) or if the two work in conjuction in the year 2016/17. I have checked the HMRC guidelines, but I can't find any mention or example about this.
The scenario I'm looking at is a person (basic rate taxpayer) with small PAYE income of about £8k and a large savings income of approx. £10k for the year. I understand the Personal Allowance of £11k covers the non-saving income entirely and the first £3k of the savings income too, leaving only £7k of savings income outside the Personal Allowance. The SRS will cover another £5k of savings income, leaving only £3k to be considered. This is where I get stuck. I can't understand if this person can consider another £1k of savings income free of tax thanks to the PSA or if the PSA is essentially lost due to the fact that the SRS has been applied. In other words, will this person pay 20% income tax on £3k or only £2k of their savings income?
We always ask newbies to do a brief introduction. Eg how long a bookkeeper/do you work for an Accountants or have your own clients/what is your background pre bookkeeping/what prof body are you with/exams passed to date/which exams you are studying/where based - that sort of thing.
Also - if you could bob your first name in your signature section (go via edit profile) it means we can use your name rather than 'oi you'
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
