DIRECTORS Can Save THOUSANDS With This Tax Allowance! (Self Assessment 2023/2024)

If you are a DIRECTOR of a limited company, an EMPLOYEE earning less than £17,570 per year or are RETIRED with income below this amount, you could be missing out on HUGE TAX SAVINGS. This is how to AVOID PAYING TAX on your savings interest by combining the "personal savings allowance" and "starting rate for savings allowance".

In the UK, interest earned from savings is subject to tax on savings, as a result, many people choose to use ISAs to help avoid savings tax. However, ISAs rarely pay the highest interest rates and often you can earn more interest from non-ISA savings accounts.

Some savers choose to use non-ISA saving accounts and use the personal savings allowance to avoid paying tax.

The personal savings allowance depends on your tax band:

Basic Rate = £1,000
Higher Rate = £500
Additional Rate = £0

This is how much tax free interest you can earn on your savings before you are required to pay income tax.

The personal savings allowance is relatively well known compared to the starting rate for savings allowance.

The starting rate for savings allows you to earn up to £5,000 of savings interest in addition to your personal savings allowance.

For some people, this means a total savings tax free threshold of £6,000!

The starting rate for savings is available to those with an income of less than £12,570.

Directors of Ltd companies often choose to pay themselves a basic salary up to the personal allowance income tax threshold of £12,570 and then above this pay the rest as dividends.

From a tax perspective, dividends aren't classed as income so they don't count towards the starting rate for savings income.

As a result, directors can often make full use of the £5,000 starting rate for savings allowance. Low income employees and people that are retired may also be able to benefit from this savings tax allowance.

How to pay tax on savings interest? Most people will pay saving tax via self assessment tax returns, however, with this new found knowledge hopefully you can avoid paying tax on your savings accounts!

Видео DIRECTORS Can Save THOUSANDS With This Tax Allowance! (Self Assessment 2023/2024) канала Honest Money