Savings income doesn’t need to be taxing, but it might be taxed!
After this date however, the Government changed the legislation and banks and building societies stopped deducting tax from your account interest. At the same time a Personal Savings allowance was introduced and if you are a basic rate taxpayer you can earn up to £1,000 in savings income tax-free. Higher rate taxpayers will be able to earn up to £500. Additional rate tax payers get no allowance at all.
| Tax rate | Income band (adjusted net income) | Personal Savings Allowance |
| Basic 20% | Up to £45,000 | Up to £1,000 in savings income is tax-free |
| Higher 40% | £45,000 – £150,000 | Up to £500 in savings income is tax-free |
| Additional 45% | Over £150,000 |
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