Don’t be confused by savings changes

From April 2016 there is a new personal savings allowance which means that basic rate taxpayers can receive of £1,000 of savings income free of any tax. This is reduced to £500 for higher rate taxpayers and nothing for additional rate taxpayers.

Some people wrongly believe that savings interest is now outside tax but this is incorrect. It needs to be included in total income as this could affect whether the taxpayer is liable to basic, higher or additional tax rates.

Banks will no longer have to deduct tax at source so some clients used to getting a refund of tax deducted at source may find that they now have tax to pay instead.

If you have any queries, please contact us.