On 6 April, as announced in the March 2016 Budget a tax-free Personal Savings Allowance (PSA) will be introduced for savings income (such as interest from banks and building societies) paid to individuals.
The measure means that basic rate tax payers will be able to receive up to £1,000 of savings income, and higher rate taxpayers can receive up to £500 of savings income, without any tax being due. The PSA will not be available to any saver with additional rate income.
Alongside the introduction of the PSA, banks, building societies and NS&I will cease to deduct tax from account interest they pay to customers.
HMRC have issued a Policy Paper setting out the current legislation and proposed revisions.
