A new Personal savings allowance is to be introduced with effect from 2016/17 at the rate of £1000 for basic rate taxpayers and £500 for higher rate taxpayers. There will be no allowance for additional rate taxpayers.
To avoid any problems with claiming back tax taken out at source from savings income, the automatic deduction of tax at source by banks will cease from the same time.
Thus any taxpayers who have savings income above this limit but who are still paying tax at the basic rate will need to be aware of the possibility of having a tax liability on the savings income above the allowance. Whether or not they will need to register for self assessment having previously not fulfilled the criteria for registration remains to be seen but no doubt more details will emerge over the course of the next 12 months before the rules are put firmly in place.Last modified on