ITV Expert Reveals Little-Known Tax Allowance That Can Earn Savers Up to £18,570 Tax-Free!
Are you tired of paying taxes on your hard-earned savings? Well, we have some good news for you! A recently discovered tax allowance could allow certain savers to earn up to £18,570 in interest completely tax-free. This revelation was made by an ITV expert, who explained the details of this rarely spoken about allowance.
Firstly, let’s understand what a tax allowance is. In simple terms, it is the amount of income you can earn before you are required to pay taxes. In the UK, the basic personal allowance for the tax year 2021-2022 is £12,570. This means that you can earn up to this amount without having to pay any income tax. However, what many people are not aware of is that there are additional allowances available, which can further reduce your tax liability.
One such allowance is the Personal Savings Allowance (PSA), which was introduced in April 2016. This allowance allows basic rate taxpayers to earn up to £1,000 in interest tax-free, while higher rate taxpayers can earn up to £500. However, as per the ITV expert, there is another little-known allowance that can add to your PSA and potentially increase it to a whopping £18,570!
This allowance is called the Starting Rate for Savings (SRS) and is available to those with a low income. To be eligible for this allowance, your total taxable income must be less than £18,570, and you must not be a higher rate taxpayer. If you meet these criteria, you can earn up to £5,000 in savings interest tax-free, in addition to your PSA. This brings the total tax-free allowance to £18,570, which is a significant amount for most savers.
So, how can you take advantage of this allowance? The first step is to check your eligibility. If you meet the income criteria, you can open a savings account and start earning interest without worrying about taxes. It is essential to note that the SRS is not automatically applied, and you must inform your bank or building society to apply it to your savings account.
It is also worth mentioning that this allowance applies to all types of savings, including cash ISAs, fixed-rate bonds, and even peer-to-peer lending. This means that you can diversify your savings and still benefit from the SRS.
Furthermore, the ITV expert also highlighted that this allowance is in addition to the PSA, which means that you can earn up to £18,570 in interest tax-free every year. This is a significant amount, and for those who have been diligently saving, it can make a significant difference in their finances.
The introduction of the SRS has been a game-changer for savers, especially those with a low income. It has opened up opportunities for them to earn more interest on their savings without having to worry about taxes eating into their earnings. This allowance has been particularly helpful for retirees who rely on their savings for income.
In conclusion, the ITV expert’s revelation about the rarely spoken about tax allowance has given savers a reason to rejoice. The SRS has the potential to increase the tax-free allowance for savings to a substantial amount of £18,570, which can make a significant difference in one’s financial planning. So, if you are eligible for this allowance, make sure to take advantage of it and start earning tax-free interest on your savings. It’s time to make your money work for you!
