Personal Savings Allowance
Since 6 April 2016 basic rate tax (20%) is no longer deducted from savings interest as most UK taxpayers will have a Personal Savings Allowance (PSA). From this date:
- basic rate taxpayers can earn up to £1,000 income from savings (eg credit interest) tax-free
- higher rate tax payers can earn up to £500 savings income tax-free
- additional rate taxpayers don't get a PSA.
You don't need to do anything different. If your savings income is less than your PSA you won't pay any tax on it. If your savings income is more than your PSA, where possible HM Revenue & Customs (HMRC) will collect any tax automatically via your tax code, based on information from banks and building societies. If you currently complete a self assessment tax return, just continue doing this as normal.
You can find more information about these changes on the HMRC website opens an overlay but if you need help or advice we recommend you speak to an accountant or tax advisor.
Personal Savings Allowance (PSA) frequently asked questions
What is savings income?
Does income from my Individual Savings Account (ISA) count towards my PSA?
Will the way credit interest is paid on my accounts change?
Will the changes affect savings income I received before 6 April 2016?
Do I need to tell you about other savings income or my tax rate?
I've registered to receive gross interest (without tax taken off), what do I need to do now?
What about interest paid on compensation payments?
How do I claim back tax paid on other savings income?