From 6 April 2016, most UK taxpayers will have a new Personal Savings Allowance (PSA). This means that up to £1,000 of income from savings (e.g. any credit interest earned) will be tax-free for basic taxpayers, and up to £500 of savings income will be tax-free for higher rate taxpayers. Additional rate taxpayers will not be entitled to any PSA.
We are currently required to take basic rate tax from your savings interest. From 6 April, we will stop doing this.
There is no action for you to take. If you have savings income below your new Personal Savings Allowance you will have no tax to pay.
If your savings interest exceeds your Personal Savings Allowance, where possible HMRC will collect any tax you have to pay automatically through a change to your tax code based on information provided by banks and building societies.
If you currently complete a Self Assessment tax return you should continue to do so.
For further information about these changes, go to the HMRC website, and / or seek further advice from your accountant or tax advisor.
View our range of savings accounts to find the one most suited to your needs.
The following questions and answers should help if you receive credit interest on your accounts.