Changes to Savings Income from April 2015

17 November 2014

0% savings rate

During the 2014 Budget, the Government announced that it intends to abolish the 10% ‘starting-rate’ of tax for savings income and will replace it with a new 0% rate in order to provide further support for the low income savers. This change will take effect from April 2015.

In his budget, the Chancellor also announced that the Government will also increase the amount of savings income that the new 0% rate applies to, from £2,880 to £5,000.

How will the new 0% rate affect me?

From April 2015, if your total income (including items such as your wages, pension, benefits and savings income) is less than your personal allowance, plus £5,000, you will be eligible to register for tax-free savings with your bank or building society.

Nearly everyone is entitled to a personal allowance, which allows you to receive a tax-free amount of income. As of April 2015, the basic tax-free personal allowance will be set at £10,500. This will mean that individuals with a total income of less than £15,500 will not pay any income tax on their savings.

To read case studies provided by HM Treasury, please click here.

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