• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Ask AI
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

20% off ACCA & CIMA Books

OpenTuition recommends the new interactive BPP books for September 2025 exams.
Get your discount code >>

Personal Savings Allowance

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA TX-UK Exams › Personal Savings Allowance

  • This topic has 3 replies, 2 voices, and was last updated 3 years ago by Tax Tutor.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • February 8, 2022 at 8:41 pm #648332
    1906254@uad.ac.uk
    Participant
    • Topics: 1
    • Replies: 1
    • ☆

    Hi,

    I studied at college for the first two years of further education (which included an extensive module on tax) and am now in year 3 of university.

    In college we were advised that what determined your personal savings allowance was your total taxable income (ie non savings, savings and dividends added together). So, if that totalled above the basic rate band threshold, you were entitled to £500 or £0 (depending on your total earnings).

    Now in university, the lecturer is advising that you only work out the personal savings rate band based solely on non savings income, less the personal allowance (not personal savings allowance, but personal allowance).

    I have looked at the videos on line and I think what I understand from your content, is that the 1st way (total taxable income) is correct, but I wanted to post the question here to see the advice.

    I have looked at past ACCA papers and solutions, but the amounts are so high that this isn’t even a consideration (£150k upwards).

    Can you advise?
    Thank you.

    February 9, 2022 at 12:02 pm #648355
    Tax Tutor
    Member
    • Topics: 2
    • Replies: 3965
    • ☆☆☆☆☆

    If you go back to the study notes and lectures you will find that there are TWO separate issues here that pertain to the taxation of Savings Income
    The Savings Income nil rate band – which is dependent upon total taxable income and whether the taxpayer is a just a basic rate taxpayer, or higher rate taxpayer or additional rate taxpayer, and
    the 0% Starting Rate of tax which is only available on savings income that falls into the first £5,000 of taxable income, which is established by taking the PA firstly from Non Savings income to compute if any part of the Savings Income does then fall into the first £5,000 of taxable income.
    See Chapter 2 Section 3.2 (e) and the examples that follow – most specifically Example 5

    February 9, 2022 at 5:20 pm #648378
    1906254@uad.ac.uk
    Participant
    • Topics: 1
    • Replies: 1
    • ☆

    Here is an example which might explain better what I am asking (ignoring the first £5k rule):

    For the tax year 2020-21, Joe has a salary of £46,500, savings income of £2,000 and dividend income of £6,000. During the year, he paid interest of £300 which was for a qualifying purpose. Joe’s employer deducted £6,800 in PAYE from his earnings. The income tax payable by Joe is:

    Non Savings Income : £46,500 – £300 – £12,500 (PA) = £33,700
    Savings income: £2,000
    Dividend income : £6,000
    Total income : £46,500 + £2,000 + £6,000 – £300 – £12,500 = £41,700

    What would be the personal savings allowance here – £500 or £1,000?

    February 10, 2022 at 11:07 am #648430
    Tax Tutor
    Member
    • Topics: 2
    • Replies: 3965
    • ☆☆☆☆☆

    As I stated previously the rules with examples are clearly illustrated in the study notes and lectures – please use and answer your own question – is the taxpayer a higher rate taxpayer – yes – therefore??
    Also – you cannot choose to ignore tax rules – they either apply or they do not – does the 0% starting rate apply here – if not then no 0% starting rate
    Also note that what you are referring to above as “Total Income” is not Total Income but is total Taxable Income

  • Author
    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

Donate
If you have benefited from our materials, please donate

ACCA News:

ACCA My Exam Performance for non-variant

Applied Skills exams is available NOW

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

ACCA CBE 2025 Exams

How was your exam, and what was the exam result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Donate

If you have benefited from OpenTuition please donate.

PQ Magazine

Latest Comments

  • mrjonbain on ACCA BT Chapter 6 – Some legal obligations – Questions
  • Ken Garrett on ACCA BT Chapter 6 – Some legal obligations – Questions
  • Ken Garrett on The nature and structure of organisations – ACCA Paper BT
  • OmarAlbeity on ACCA BT Chapter 6 – Some legal obligations – Questions
  • Salimbek909 on The nature and structure of organisations – ACCA Paper BT

Copyright © 2025 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in