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.
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 firstname.lastname@example.org.
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
The information contained herein is of a general nature and is not intended to be received as formal professional advice. Whilst we endeavour to provide accurate information, there can be no guarantee that the information is accurate as of the date it is received, or that it will continue to be accurate in the future, due to legislative changes. It is therefore important that before you act upon any information contained herein you seek appropriate professional advice to take account of your exact circumstances.