Martin Lewis issues welcome news to anyone with under £20,000 savings
Martin Lewis has issued good news for anyone with less than £20k in their savings accounts. The BBC Sounds and ITV star has spoken out ahead of the HMRC tax return deadline, which requires self assessments to be lodged by next week on January 31.
Ahead of the deadline, Martin, aged 52, says it's unlikely savers will need to pay anything if they have under £20,000 in the bank, depending on which tax bracket they fall into. He said: "You don't pay tax on the amount of savings you have - but you are eligible to pay tax on the interest you accrue each year.
"You will probably have a Personal Savings Allowance, which is a special amount you can earn each year which isn't taxed." He said: He continued: "People earning £12k to £50,000 a year, your PSA is £1,000. You can earn £1,000 of interest and you don't have to pay tax on it. So let us do a little bit of maths.
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"The top paying easy access rate at the minute is about five per cent - so you'll need to have about £20,000 to accrue £1,000 in interest." How much Income Tax you pay in each tax year depends on how much of your income is above your Personal Allowance and how much of your income falls within each tax band.
Some income is tax-free. The current tax year is from 6 April 2024 to 5 April 2025. The standard Personal Allowance is £12,570, which is the amount of income you do not have to pay tax on. Your Personal Allowance may be bigger if you claim Blind Person’s Allowance.
It’s smaller if your income is over £100,000. You can also see the rates and bands without the Personal Allowance. You do not get a Personal Allowance on taxable income over £125,140.