Personal savings allowance update
Receive our latest tax tips and the news affecting our clients, as well as access to those previously archived, by signing up for our free newsletter below.
Newsletter issue - March 2016.
From 6 April 2016, the personal savings allowance (PSA) will allow basic rate taxpayers to receive up to £1,000 of savings income tax-free. For higher rate taxpayers, this limit will be £500. HMRC have published guidance setting out details of what counts as savings income and how the allowance will be calculated, including some useful examples.
Savings income includes account interest from:
- bank and building society accounts;
- accounts with providers like credit unions or National Savings and Investments.
It also includes:
- interest distributions (but not dividend distributions) from authorised unit trusts, open-ended investment companies and investment trusts;
- income from government or company bonds; and
- most types of purchased life annuity payments.
Interest from Individual Savings Accounts (ISAs) does not count towards the PSA as it is already tax-free.
For further information on the PSA, see the GOV.UK website at here.