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Interest earned from savings is taxable, according to the table below.
Tax rates for savings
Basic rate taxpayer
Higher rate taxpayer
20% on annual interest earned above £1000
40% on annual interest earned above £500
Matthew is a higher rate taxpayer.
Therefore, any savings interest he earns over £500 within a year is taxed at
40%.

On 1st May 2016, he invested £150 000 in a savings account that pays
interest at a rate of 1-98% per annum.
Savings interest is added at the end of every month.
Calculate the date when the interest that Matthew earned went above his
annual tax-free limit.

Sagot :

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