From the beginning of the new tax year (6th April), adults in the UK will no longer be required to pay tax on the first £1000 of savings interest earned.
Currently, for every £100 interest earned, basic rate taxpayers will pay £20 in tax, or £40 if the person is a higher rate tax payer, however from 6 April the new personal savings allowance means every basic-rate taxpayer can earn £1,000 interest without paying tax on it.
Each individuals Personal Savings Allowance depends of what rate of tax payer they are;
Which forms of interest are covered?
Dividend income from shares or funds is not included!
Any interest or payments that you earn from Tax Free investments is in addition to the Personal Savings Allowance so you don’t need to deduct this from your £1000 (BRT) or £500 (HRT) allowance.
From the new tax year you will note that all banks and building societies will pay all savings interest due to you gross.
You should note that your Savings Personal Allowance is completely separate from the Personal Allowance all taxpayers get on their standard income.
Of course there’s a lot more to this that we have detailed on here so, if you have any questions or you’d like to enquire about savings please feel free to get in touch by completing the form below. We will get back to you as soon as we can.