If you are a basic rate taxpayer, you have a savings allowance of £1,000 in 2017-18; for higher rate taxpayers it’s £500. You pay no tax on any interest you receive which is covered by your savings allowance.
If you examine your PAYE tax code you may see an amount of ‘untaxed interest’ set against your personal allowance. Where your interest is covered by your savings allowance, this is a waste of your personal allowance. For small company owners who receive more than £5,000 of dividends it would be more efficient to set any unused personal allowance against dividend income.
If you have received a one-off bonus or commission payment since 6 April 2017, the HMRC computer will have interpreted that as a permanent increase in your monthly pay. Multiplying your bonus by twelve could take your estimated pay into a higher tax band, which will affect the rate of tax deducted through PAYE. We can help you check whether your PAYE code has been amended to deduct too much tax.
You can access your personal tax account online at: gov.uk/ personal-tax-account to query any figures in your PAYE code, such as your estimated annual pay. However, you may need to ring HMRC (on 0300 200 3300) to get your personal allowance reallocated.