Certain workers getting HMRC Personal Tax Free Allowance hiked to £18,570
But those earning less than £18,570 per year can boost their tax-free allowance to that amount by using a little-known HMRC rule called the Starting Rate for Savings.
Martin Lewis, the BBC and ITV star, said: "If you earn less than £18,570 a year from earned income and savings combined, then all your interest from those savings could be tax-free.
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"That's because you get your personal allowance before you start to pay income tax (£12,570), plus the starting rate for savings (up to £5,000) and the personal savings allowance (£1,000) all in combination."
Money Saving Expert explains: "Cheryl: No income from work, has £20,000 of savings income. In this case, Cheryl will be liable to pay tax amounting to a mere £286.
"Given that she has no earned income, the interest on her savings is largely covered by a mix of allowances: Personal allowance – the initial £12,570 is exempt from tax. Starting savings rate – the subsequent £5,000 is also tax-free, meaning £17,570 of the interest income is taxed at 0%. Personal savings allowance – ensures the next £1,000 is tax-free, so £18,570 is taxed at 0%."
HMRC says: "You may also receive up to £5,000 of interest and not have to pay tax on it. This is your starting rate for savings.
"The more you earn from other income (for example your wages or pension), the less your starting rate for savings will be. You're not eligible for the starting rate for savings if your other income is £17,570 or more. Your starting rate for savings is a maximum of £5,000. Every £1 of other income above your Personal Allowance reduces your starting rate for savings by £1."
You earn £16,000 of wages and get £200 interest on your savings. Your Personal Allowance is £12,570, HMRC says.
It's used up by the first £12,570 of your wages. The remaining £3,430 of your wages (£16,000 minus £12,570) reduces your starting rate for savings by £3,430.

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