Deryn has earnings £20,000 and savings income of £5,000. Deryn’s personal allowance is £6,035 because she is under 65. Deryn’s taxable income is £ 18,965. The calculation below shows how this is worked out.
Total income £25,000
Less personal allowance £ 6,035
Taxable income £ 18,965
After taking the personal allowance off her earnings, the amount of earnings
that is taxable is more than £2,320 (£20,000 - £ 6,035
= £13,965) so none of her savings income is taxed at 10%. All of her
income is taxed at 20%, and she cannot claim any tax back from HM Revenue
& Customs.
