Important information - Upcoming maintenance: The CII will be undertaking work on our IT systems throughout the entire weekend of 12-14 October, as part of our strategy to better support our members and customers.
The work will mean that during this time there will be no access to the CII/PFS/SMP websites and learners will be unable to take exams, access RevisionMate, or make purchases on these days. We have spoken to all those who have booked to sit an exam on these days to advise them of what action they need to take. We apologise for any inconvenience caused.
A reminder of how the starting rate band for savings income applies
The savings rate band (SRB) is a 0% band, which is set at £5,000 for the 2024/25 tax year. The SRB applies to the first £5,000 of savings income (mainly bank and building interest). The SRB is, however, restricted by non-savings, non-dividend, income – in essence none of the band will be available if an individual’s non-savings, non-dividend, income is above their personal allowance plus the £5,000 starting rate. The personal savings allowance (PSA) is £1,000 for basic rate taxpayers and £500 for higher rate taxpayers. Additional rate taxpayers aren’t eligible. The PSA is applied after the SRB.
The SRB and PSA are dependent on an individual’s total taxable income.
In practice to work out whether an individual can benefit from the SRB you would need to add up all of their non-savings income, so salary, partnership profits, rental profits, pension income, etc. If their total income is below the personal allowance - £12,570 in 2024/25 plus £5,000 (£17,570) then the SRB will apply. However, if the individual’s non-savings, non-dividend, income is above their personal allowance, they lose £1 of the £5,000 SRB for every £1 of non-savings, non-dividend, income above the personal allowance – see example 2 below.
The individual can then also use any PSA against any savings income which is not covered by the personal allowance or SRB.
Any savings income above the available SRB and PSA will be taxable to income tax at the individual’s marginal rate.
Example 1
Paula has a rental profit of £12,000 and interest income of £700. As her non-savings income is below £17,570 she will benefit from the SRB.
Her tax position will therefore be as follows:
Rental profit £12,000
Savings income £700
Less personal allowance (£12,000) (£570)
£0 £130
As £130 is covered by the SRB of £5,000, she would have no income tax to pay.
Example 2
Mark works a few hours a week earning £14,400. He also receives interest of £3,200.
As Mark’s non-savings income is below £17,570, he would benefit from the SRB. However, the amount available would be reduced by the amount by which his non-savings income exceeds his personal allowance, so by £1,830 to £3,170. His tax position will therefore be as follows:
Earnings £14,400
Savings income £3,200
Less personal allowance (£12,570) £0
£1,830 £3,200
*SRB (£3,170)
PSA (£30)
Tax to pay on his non-savings income
£1,830 x 20% £366
*The SRB is £3,170 [£5,000 - £1,830] plus Mark would benefit from a PSA of £1,000 – even though only £30 is used in this example - so he would have no tax to pay on his savings income.
Example 3
Chloe has non-savings income of £17,800 and interest income of £2,100.
Here, as her non-savings income is over £17,570, she would not benefit from the SRB but would still benefit from her PSA as follows:
Earnings £17,800
Interest £2,100
Less personal allowance (£12,570) £0
£5,230 £2,100
PSA (£1,000)
£1,100
Tax to pay
On on-savings income: £5,230 x 20% £1,046
On non-savings income: £1,100 x 20% £220
Total £1,266
Example 4
Ahmed has earned income of £52,100 and receives interest of £3,600.
As his non-savings income is above £17,570, he would not benefit from the SRB and his PSA would be £500 as he’s a higher rate taxpayer.
His tax position would therefore be as follows:
Earnings £52,100
Interest £3,600
Less personal allowance (£12,570) £0
£39,530 £3,600
PSA (£500)
£3,100
Tax to pay
Non-savings income:
£37,700 x 20% £7,540
£1,830 x 40% £732
Savings income:
£3,100 x 40% £1,240
Total £9,512
Finally, remember that anyone who has income above £125,140 will not be eligible for the 0% SRB or a PSA and will also fully lose entitlement to their PA.
What’s Included:
From broking to underwriting- you’ll gain a foundational knowledge of all things insurance. You’ll discover what roles are available and which skills you will need to succeed. You’ll get a real sense of the various pathways available in this diverse profession. You’ll complete a series of quizzes and activities and (virtually) attend live webinars to help build your understanding of the profession.
This programme is open to anyone aged 13+, and is free to join.
Look out for the new Personal Finance programme, coming soon!
