TXCouples tax saving

QUESTION: Page 93 Kaplan study text Ting is married to Ning. She has employment income of £54,000 p.a. She has various bank accounts from which she receives interest of £5,625 each year. Ning earns £20,000 trading profits from self-employment each year. He has no other income. Calculate the couple’s income tax liabilities for the tax year 2024/25 and advise how they could have saved tax by reorganizing their investments. Solution Ting – Income tax computation – 2024/25 Nonsavings income Savings income Total £ £ £ Employment income 54,000 54,000 Bank interest 5,625 5,625 –––––– –––––– –––––– Total income 54,000 5,625 59,625 Less: PA (12,570) (12,570) –––––– –––––– –––––– Taxable income 41,430 5,625 47,055 –––––– –––––– –––––– Income tax: £ £ Non-savings income – basic rate 37,700 × 20% 7,540 Non-savings income – higher rate 3,730 × 40% 1,492 –––––– 41,430 Savings income – nil rate 500 × 0% 0 Savings income – higher rate 5,125 × 40% 2,050 –––––– 47,055 –––––– –––––– Income tax liability 11,082 ––––– Ning – Income tax computation – 2024/25 Ning – Income tax computation – 2024/25 Nonsavings income £ Trading income 20,000 Less: PA (12,570) –––––– Total income 7,430 –––––– Income tax liability (£7,430 × 20%) 1,486 –––––– Tax saving advice Ting is a higher rate taxpayer. She has a savings income nil rate band of £500 and mainly pays tax on her investment income at 40%. Ning, however, is a basic rate taxpayer, and has a savings income nil rate band of £1,000. If the bank accounts were in Ning’s name the first £1,000 of interest would be tax-free and he would pay tax at 20% on the balance of £4,625. His tax liability on the interest would be £925 and the couple would save tax of £1,125 (i.e. £500 × 40% + £4,625 × 20%). Alternatively Ting could invest up to £20,000 in an ISA. The interest would be tax-free. If some of the bank account is in Ning's name, he could also transfer up to £20,000 into a different ISA in his own name. MY QUERY: If the bank accounts were in Ning's name, the couple would save £1,125. When Ting was assessed on interest income = £ 2050 If Ning were assessed = £ 925 £ 2050 - £ 925 = £ 1125. I understand this but I don't understand why they are doing £500 * 40% in the brackets. What is that and how to think to arrive at £ 500 * 40%?