Tax-free savings on the way for 1m Brits

Published by Laura Whitcombe on 04 March 2015.
Last updated on 16 March 2015

Tax and money

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.

 

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