A “savings allowance” is available to basic rate taxpayers – £1000 p.a. and higher rate taxpayers – £500 p.a.
With low interest rates – e.g. 0.1%, £1m in savings would be needed to generate £1000 interest income. However, with interest rates on the rise – and more to come? – a taxable position could soon arise. That £1m could generate £50,000 at 5% rates – which does sound very high but is achievable now. Even at a more modest 2.75% this would generate £27,500 – way above the savings allowance rate. Just over £36,000 at 2.75% will produce £1,000 of interest.
Come and have a chat with us if you have significant cash funds.
