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 (e.g. 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 [Will show a security message first] but if you need help or advice we recommend you speak to an accountant or tax advisor.