Millions of savers are set to benefit from tax-free savings

/ Tax

The way in which savings income is taxed will change from 6th April 2016. Currently banks deduct 20% tax from most interest and for basic rate tax payers this is enough to cover any liability. But from April millions will benefit when banks and building societies stop deducting tax automatically from their savings income.

In simple terms every basic-rate taxpayer can earn £1,000 interest on their savings without paying any tax on the interest gained. There will also be a reduced tax free allowance of £500 for higher rate taxpayers and no allowance for additional rate tax payers. But please bear in mind that anyone earning more than the tax free allowance will have to pay tax on their savings interest.

Tax is a minefield so why not talk it through with an AIMS Accountant who can explain the benefits to you in more detail.