INTERESTING TIMES: FORTHCOMING CHANGES IN THE TAXATION OF INTEREST
The March 2015 Budget announced that a personal savings allowance of £1,000 for basic rate taxpayers and £500 for higher rate taxpayers is due to apply from 6 April 2016. It is understood that this will be restricted to savings income and that it will not apply to 45% taxpayers.
From the same date, in a massive change in practice, all interest paid by banks and building societies will be paid gross without tax deducted. The legislation for the personal savings allowance was not included in the Summer Finance Bill and we will probably have to wait until the draft Finance Bill 2016 is available in late 2015 to further reflect on both the new savings allowance and gross interest payments.