From 6 April 2016, one of the biggest changes for savers ever was introduced, the Personal Savings Allowance (PSA).
The personal savings allowance affects how much tax you pay on the interest earned on your savings. See the below table for the most up to date allowance.
How your Personal Savings Allowance depends on your taxable income:
Tax brand Personal Savings Allowance
Basic rate tax - 20% £1.000
Higher rate tax - 40% £500
Additional rate tax - 45% No Allowance
Source: HMRC
*Scottish tax rates may differ
Basic rate taxpayers are able to earn up to £1,000 in savings interest per year, tax-free.
Higher rate taxpayers are eligible for a £500 tax-free allowance per year.
Additional rate taxpayers are not entitled to a Personal Savings Allowance.
The majority of savers won’t need to do a thing, as they’re not likely to earn more than the Personal Savings Allowance therefore most savers will receive tax free interest.
This is a big change for UK savers and we want our customers to be as well-informed as possible. So this part of our website is dedicated to helping you understand your new Personal Savings Allowance.
