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Thread: Personal Savings Allowance Question

  1. #1

    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.

  2. #2
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    Intrigued to know the answer to, but I suspect your wife's gross income will be the factor deciding the allowance.

  3. #3
    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!)

  4. #4
    Quote Originally Posted by BCD View Post
    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!)
    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.

  5. #5
    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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