A lot of our clients are not aware of the starting rate of savings. To find out more read this short blog post.
We find a lot of clients are unaware of the starting rate of savings. This is a tax free amount of £5,000 in interest income. The more earned from other income the lower this savings rate is.
To be eligible your total other income, i.e. salary must not be more £17,500. If your other earnings are less than £17,500 then the maximum starting rate of savings is £5,000. For every £1 of other income above your Personal Allowance reduces your starting rate for savings by £1.
This is not be to confused with the personal savings allowance which either £500 or £1,000 depending on whether you are a basic rate or higher rate taxpayer.
Individuals who have perhaps loaned their start-up a substantial sum of money as loan can utilise the starting rate of savings by ensuring the company pays them interest on the loan at a commercial rate.