Taxation of Savings Income

Taxation of savings income

Currently, some individuals qualify for a 0% starting rate of tax on savings income up to £5,000. The government has confirmed that the £5,000 band will be kept at the same level for 2018/19. The rate is not available if taxable non-savings income (broadly earnings, pensions, trading profits and property income) exceeds the starting rate limit.

A Personal Savings Allowance will apply for up to £1,000 of a basic rate taxpayer's savings income, and up to £500 of a higher rate taxpayer's savings income each year. The Personal Savings Allowance will not be available for additional rate taxpayers.

Comment

The current 0% starting rate does not apply to many people as income, such as a salary, exceeds the total of the personal allowance (£11,850) and the starting rate limit of £5,000. The Personal Savings Allowance will however be of benefit to all basic and higher rate taxpayers.

The government estimates that around 95% of taxpayers will not pay any tax on interest received.

For further information

For expert advice on how these changes may affect you, please contact our Tax experts at Hallidays on 0161 476 8276 or email hello@hallidays.co.uk.

Disclaimer

While we have made every effort to provide accurate and up to date information on our website, the law is constantly changing and affects each person or business in different ways. Read our disclaimer.

Updated December 2018

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