Bank and other interest to be paid gross from April 2016

News: September 2015

Bank and other interest to be paid gross from April 2016

As announced in the spring 2015 Budget, a new personal savings allowance will be introduced from 6 April 2016. This will be £1,000 a year tax free for basic rate taxpayers and £500 a year for higher rate taxpayers, but nil for those with income over £150,000.

As a consequence, tax will no longer be deducted at source from bank and building society interest. HMRC have launched a consultation to review whether changes should also be made to the rules on deduction of tax from other types of savings income such as “peer to peer” loans.

Remember also that the first £5,000 of dividend income will be tax free from 6 April 2016, but it remains to be seen whether this will apply to directors of their own companies.

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