An important date everyone! From April 6th the government are introducing a personal savings allowance which will allow you to receive interest tax free earned on a savings and current account up to a certain limit.
Before the government used to take 20% of all interest earned on your non-ISA savings and current accounts for tax payers.
If I tried taking my sister’s pocket money I’m sure I’d be told I was a bit of a “cheeky rascal”.
But now if you’re a basic rate taxpayer you’ll pay no tax on up to £1000 of the interest you’ve earned. If you’re a higher rate taxpayer you’ll pay no tax on up to £500 of the interest you’ve earned. If you are an additional rate tax payer, you have to pay tax on any interest you earned. That all sounds simple enough.
But if you do go over your allowance you may still be liable to pay tax directly to the HMRC. I’m not quite sure exactly who they are, but I’m pretty sure the Queen’s got something to do with it. Best behavior now adults, don’t want to end up in the Tower!!
And any interest you earn in an ISA doesn’t count towards your Personal Savings Allowance, so it’s still the most tax efficient way to save.
Right I’m going to go and see if my mum and dad get it now…I set them some homework!