Personal Savings Allowance changes effective from 6th April 2016
The introduction of the new personal savings allowance means that from 6th 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 does not count towards your personal savings allowance because it is already tax-free.
From 6th April 2016, 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 6th 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 go to www.gov.uk and search for Personal Savings Allowance. The Chorley 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. The Chorley Building Society cannot help you with this but will show any deductions made this way in statements.