Personal Savings Allowance Question

Hope someone may help here.

My wife earns £20,000 pa, but pays £8,150 pa directly into a pension. So she pays no income tax as she effectively earns only £11,850 which is equivalent to her personal allowance.

If you earn £20,000 pa, your personal savings allowance is only £1,000 (i.e you can earn £1,000 in interest tax free).

However, if she earns £11,850 she gets £5,000 personal savings allowance.

So, based on the fact that her gross income is £20,000, but her earnings are £11,850, which personal savings allowance does she get?

The reason I ask is that we are thinking of transferring a large lump sum from ISA to normal savings. This is because we can get 2.05% (whoopee) on normal saving fixed for 1 year, but only around 1.5% for the equivalent ISA.

Thanks in advance.

Intrigued to know the answer to, but I suspect your wife's gross income will be the factor deciding the allowance.

Keep it in the ISA, after the first year I’d put money on that magical 2% falling well below any standard account! Transfer your ISA to a managed portfolio and earn some real interest on it! (I got in the region of 11% last year, this year is struggling but on the way back up, still better than 2%mind!)

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Originally Posted by BCD

Keep it in the ISA, after the first year I’d put money on that magical 2% falling well below any standard account! Transfer your ISA to a managed portfolio and earn some real interest on it! (I got in the region of 11% last year, this year is struggling but on the way back up, still better than 2%mind!)

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2% is risk free.

Managed portfolio is at risk. You can have a return of 11%, but equally lose 11%.

Nervous about putting anything with stock market links given the meteoric rise over the last few years, and possible bubble territory. Greater fool and all that.

Also remember that the ISA wrapper means it will remain tax free so when interest rates rise it will still be tax free.


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