Some new information (to me at least), and a question...

I learned from comments below a Monevator article that the PSA is more complex than I had thought. Specifically, the headline £1K allowance may be greater for those not earning or taking income from a pension over a certain amount. So if your income is less than £5K above the personal income tax allowance, your savings allowance will be £5K less that excess amount, not £1K.

The above won't apply to me in the current tax year, so I assumed I'd have to register for self assessment in order to pay the tax due on my cash savings, which are greater than normal due to a recent inheritance. When I complete the quiz on the gov.uk website, however, it tells me that if the savings interest is below £10K, then I don't need to do so. Can anyone explain how tax is paid on savings interest that is above £1K but below £10k?

Many thanks in advance. The Monevator article is here:

https://monevator.com/wh...ddenly-important-again/

Thanks for that, Clive - very helpful.

Good news that I can avoid the excitement of self assessment!

My savings are likely to fluctuate quite wildly over the next couple of years (inheritance / large building project / house sale) but hopefully it will all balance out in the end.

I think I'll definitely take less pension income next year in order to boost the savings allowance and top up with tax free lump sum withdrawals. I'll be handing over large amounts of tax through VAT on the building works, as well as two lots of council tax while the works are going on (not to mention the impact of fiscal drag) so I have no qualms about optimising my affairs as best I can. I just need to ensure I pay enough tax so that the gift aid on my charitable contributions is not impacted. (For those in a similar position, you need to ensure your donations are not more than 4x the amount of income tax + CGT paid; tax on savings doesn't count.)

£30k isn't a huge income though. Majority of which is coming from personal savings and therefore reduces dependence on the state. Nor forget that the money spent ends back up in the Treasury. Tax exists everywhere in the economy. Not just the direct taxes you incur personally.

It's a pretty good income once you have no mortgage, debts and no work/travelling expenses. I traded a more modest lifestyle for early retirement.

I manage very well on this plus some ISA Drawings as and when needed, plus those 25% lump sums from the SIPP. It's amazing what you can do once you can travel on odd days at short notice and devote a bit of time to being miserly (sorry 'economical').
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Lifestyle is a choice. Shame more people aren't like your good self and make sensible personal finance decisions throughout their working lives. Surprising how far your money can go if you avoid the temptation to keep up with the Joneses or feel the need to travel thousands of miles just to lie on a beach.

Let's revisit this once the DB schemes are done and dusted