New changes to tax on savings...

Enable’s IFA’s in Bishops Stortford are keen on saving; small regular savings and compound interest is the bedrock of wise financial planning. So it is good to see that after six years of rock-bottom interest rates for savers they will finally have something to celebrate. In Chancellor George Osborne’s 6th Budget last week he announced that most people will not have to pay tax on the interest they earn on their savings in a year. He said basic rate taxpayers can receive up to £1,000 of “savings-interest” free of tax from April 6 next year, this however will fall to £500 for higher--rate taxpayers and will not apply to the 45 per cent band.

Essentially this means that most people with savings will not be paying any of the interest made on their savings to the taxman. His decision, to make the first £1,000 of savings interest tax-free should lift 95 per cent of savers out of tax and about 17 million savers are expected to benefit. Anna Bowes, director of rate tracking service Savings Champion, says current low interest rates mean basic rate taxpayers can build up large sums before paying any tax at all: "Savers could deposit more than £66,000 at a rate of 1.5 per cent from 2016 and take all their returns tax free or £33,000 in a fixed rate account paying 3 per cent."

There was also good news for non-taxpayers, with interest that is paid gross many banks and building societies currently automatically deduct 20 per cent tax of the interest paid on standard accounts and no-taxpayers have to complete form R85 to claim this money back. From April 2016, banks and building societies will pay interest gross without deducting 20 per cent tax so there is no paperwork to do.  If you want to look at your saving options Enable's IFA’s in Bishop’s Stortford are here to help.

Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
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