April 6th 2016 4:43 pm

Written by Owen Brenman

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Savings Paid Tax Free From Today

Banks and Building Societies to no longer deduct tax on interest on statements.

Savings accounts will pay interest gross from today - that means that they will no longer take a 20% slice upfront to pay the Taxman. Instead the onus is on the individual to notify the HMRC with a tax return if the amount received breaches the threshold. In most cases banks will notify HMRC automatically of the amount of interest it is paying.

The reason for the change is the introduction of a new savings allowance which allows the first £500 or £1,000 of savings income (depending upon if the taxpayer is a basic or higher rate payer) to be tax-free.

The allowance applies only to types of savings accounts where interest in generally taxable so ISAs, premium bonds etc are out of its scope.

Read more savings news from April 2016

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