Tax on Savings

Tax Changes: April 2016

From 6 April 2016 HM Revenue & Customs (HMRC) is introducing a tax-free Personal Savings Allowance. This means if you are a basic rate taxpayer you will be able to earn up to £1,000 in savings income tax-free. Higher rate taxpayers will be able to earn up to £500.

The new allowance means that most people will no longer pay tax on their savings interest and your bank/building society will stop deducting tax from the interest paid on your account(s).

If you already receive interest without tax being taken off, you will no longer need to tell us that you qualify for tax-free interest.

HMRC tax rules are subject to change in the future and will depend on your individual circumstances. Further information can be found on the government website.

 

Tax on Savings Prior to April 2016

If you are a UK taxpayer, prior to 6 April 2016 you will have been taxed on the interest that you received on your account during that period. This interest is known as “savings income”.

Interest on savings income normally has 20% tax taken off but savers on a low income may have been able to qualify for a lower or even 0% tax rate.

To have received interest without tax being deducted from your savings account with Mansfield Building Society you will have needed to have completed an R85 form and sent it to us.

If you are unsure whether you have paid tax on your savings, check for the words “Tax Paid” immediately underneath the interest entry in your passbook. If the entry shows only the word “Interest” then no tax has been deducted.

To reclaim overpaid tax you will need to complete an R40 form and send it to HMRC. You can download this form and receive guidance on completing it here.

Further government information about tax on savings and investments is also available online.