Savers in the UK are being warned about potential tax on their interest earnings, especially those with balances over £11,600. Stay informed!
London: Savers are getting a heads-up about tax on their interest earnings. Alice Haine, a personal finance expert, is sounding the alarm. She says many folks don’t realize they might owe tax on their savings.
According to Alice, the tax liability depends on the interest rate and how it’s applied. If you have a high-interest account, you could hit that tax threshold sooner than you think. It’s a bit of a surprise for many savers.
For higher-rate taxpayers, you can have about £11,600 in a savings account at 4.31% before tax kicks in. Basic-rate taxpayers have a bit more leeway, with nearly £23,200 before they face tax on their interest.
Alice also mentioned ISAs. You can stash £20,000 across different types of ISAs. This way, you can maximize your interest while keeping your tax bill low. Smart move!
She suggested that those earning just over £50,270 could use salary sacrifice to lower their taxable income. This not only reduces tax but also boosts pension savings. It’s a win-win!
But be careful! Lowering your salary can affect your credit and benefits. It’s wise to chat with your employer about how this might impact your take-home pay.
