Changes to Tax on Savings
From 6 April 2016 changes are being made to the way savings are taxed. The new personal savings allowance means every basic-rate taxpayer can earn £1,000 interest and higher-rate taxpayers can earn £500 interest without paying tax on it. Additional-rate taxpayers won’t receive any personal savings allowance.
The changes mean that as of 6 April all banks and building societies will pay gross interest on savings accounts. This means those previously eligible to receive gross interest will no longer need to provide an R85 form to make this happen.
HMRC have confirmed that as standard they will collect the tax by changing the individuals tax code. Banks and building societies will give HMRC the information they need to do this.
However, people who currently complete a Self Assessment tax return will need to continue doing so.