Question: If you save now is interest still deducted or is the first £1,000 interest tax free?
Anna's response: A great question and one that we will be picking up in more detail as we near the next tax year and the introduction of the new Personal Savings Allowance.
Currently our understanding of the new Personal Savings Allowance, based on the information available at the moment, is that it all depends when interest is paid on the account. If interest is due to be paid after the start of the 2016/17 tax year, when the Personal Savings Allowance is due to come into force, then you could receive up to £1,000 tax free (or £500 for Higher Rate Taxpayers). If interest is paid before April 2016, then tax will be deducted as per the current rules.
Some accounts pay interest on the anniversary of the account opening, although there are some that would pay interest before April 2016, so this is something to watch out for when opening an account or reviewing your existing accounts.
This information is based on our understanding of the new Personal Savings Allowance that will be introduced in April 2016 and may be subject to change when the finalised legislation is released.
Effectively you can start earning tax free interest today.
Any cash questions why not ask Anna Bowes our co-founder and face of savingschampion.co.uk. Email your questions to [email protected]
Call us to find our details of the best rates that offer tax free interest today 0800 321 3581.