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How does Income Tax on Bank and Building Society Interest work ?

Sasha Owen
Tax

Interest received  is paid gross ie no income tax is deducted at source

Your personal savings allowance (PSA) is a tax-free allowance that allows you to earn interest on your savings without paying tax on that interest. The allowance you get depends on what rate of income tax you pay:

Basic-rate (20%) taxpayers: you can earn £1,000 in savings interest per year with no income tax

Higher-rate (40%) taxpayers: you can earn £500 in savings interest per year with no income tax

Additional-rate (45%) taxpayers: £0 – you do not get any allowance.

You are liable to income tax even if you do not currently file a tax return

HMRC, income tax, tax for self employed, tax on interest received, therapists

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Sasha Owen
Sasha Owen BSc FCA qualified as a Chartered Accountant in 1983 and has been in practice as an accountant since 1987. If you think Sasha has the conventional image of an accountant then you couldn’t be further from reality. Sasha is a Reiki Master, loves the arts, music and theatre; having been on stage herself and worked backstage she really does have a deep understanding and love for the arts and alternative therapy world.

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