Exercise 2: £1,300 in Non-ISA Interest for a Basic-Rate Taxpayer — Possible Solution
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A basic-rate taxpayer's real Personal Savings Allowance is £1,000 -
the first £1,000 of the £1,300 earned is genuinely tax-free, since it
falls within that real allowance. The remaining £300 (£1,300 minus the
£1,000 allowance) is the genuinely taxable portion, since it exceeds
what the allowance covers.

This split only applies because the interest came from an ordinary,
non-ISA savings account - if the same £1,300 had been earned inside a
Cash ISA instead, none of it would be taxable at all, regardless of
the amount, since ISA interest is always tax-free and the Personal
Savings Allowance simply wouldn't be the relevant rule at all in that
case.

ANSWER: £1,000 of the £1,300 is tax-free, covered by the basic-rate
Personal Savings Allowance. The remaining £300 is genuinely taxable,
since it exceeds that allowance. This calculation only applies because
the interest is from a non-ISA account - the same amount earned inside
a Cash ISA would be entirely tax-free regardless of size.

WHY THIS WORKS AS AN ANSWER
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This correctly applies the real £1,000 basic-rate figure to split the
given £1,300 into its tax-free and taxable portions, and notes the
real reason the Personal Savings Allowance is the relevant rule here
specifically (a non-ISA account).