Tax-free savings on the way for 1m Brits
From 6 April one million Brits will no longer have to pay tax on interest earned from savings, while a further 500,000 people will get some of their savings income tax free.
The boost comes from the abolishment of the 10% starting rate of tax due first £2,880 of savings interest, which is to be replaced by a zero-tax band on the first £5,000 of savings interest.
Both measures were announced in the Chancellor's Budget last March, and are being pushed by the government today as it launches a new calculator to help individuals find out how much they might save.
To be eligible, savers must earn an annual income of less than £15,600 and a new online calculator to help people work out if they will benefit can be found on the HMRC website, which you can access here.
When calculating your income, you'll need to include information about any taxable wages, pensions, benefits and savings that you receive, as well as any tax-free personal allowance that you transfer or receive from a spouse or civil partner. The online calculator will help you do this.
If you are eligible for tax-free savings, you will need to register your account with your bank or building society. And if you're eligible to reclaim any tax paid on interest, you will need to complete form R40 (available at gov.uk) or include the figure on your tax return.
Boosting financial security
Chancellor George Osborne said: "A key part of our long-term economic plan is to support savers and boost hardworking people's financial security at all stages of life.
"That's why one month from now, the lowest earners can get their savings interest tax-free. This will provide a massive boost for 1.5 million savers across the country, putting money in the pockets of those who need it most."
For more information on the 0% savings changes, visit gov.uk/taxfreesavings.
This is a mutual organisation owned by its members and not by shareholders. These societies offer a range of financial services but have historically concentrated on taking deposits from savers and lending the money to borrowers as mortgages, hence the name. In the mid-1990s many societies “demutualised” and became banks. One academic study (Heffernan, 2003) found demutualised societies’ pricing on deposits and mortgages was more favourable to shareholders than to customers, with the remaining mutual building societies offering consistently better rates. In 1900, there were 2,286 building societies in the UK; in 2011, there are just 51.