The introduction of the new personal savings allowance means that from 6 April 2016 most people will no longer pay tax on their savings income. The allowance is £1,000 for basic rate taxpayers and £500 for higher rate taxpayers. (There is no allowance for additional rate taxpayers.) Interest from ISAs doesn’t count towards your personal savings allowance because it’s already tax free.
From that date, all building societies and banks will stop deducting tax from the interest they pay on your savings.
If your total taxable income is less than £17,000 you will pay no tax at all on your savings income.
You may have previously completed a form to receive interest tax free (an R85 or R105). You won’t have to do so from 6 April 2016.
If you have any savings income over your personal savings allowance you will have to pay some tax on this. HMRC will normally collect the tax by changing your tax code.
If you already fill in a self-assessment tax return you should carry on doing this and include any income from savings on your return.
For further information on how the allowance works click here www.gov.uk/government/publications/personal-savings-allowance-factsheet/personal-savings-allowance. Furness Building Society is unable to provide further help.
Interest that relates to periods before 6 April 2016 but paid afterwards will not have tax deducted. In a few isolated cases, some interest – for example, on compensation – will still have tax deducted. This interest counts towards your personal savings allowance. If you have any questions and/or need to reclaim this tax, please contact HMRC. Furness Building Society cannot help you with this.
NB: The above information does not constitute advice from Furness Building Society