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If you live in the United Kingdom* you may be able to earn interest on your savings without paying tax.  Below is an overview on the Personal Savings Allowance, tax on savings interest and how you can find out more information.

The Personal Savings Allowance

Your Personal Savings Allowance is how much interest you, as an individual, can earn before you have to pay tax on it.

The following Personal Savings Allowance amounts apply to the amount of tax free savings that a taxpayer can earn and depends on the Income Tax band that you are in. To work out your tax band, add all the interest you’ve received to your other income.

Basic Rate Higher Rate Additional Rate
£1,000 £500 £0

 

*For tax purposes, the Channel Islands and the Isle of Man are not in the UK.

Show FAQ - What happens if I exceed my Personal Savings Allowance?

If you are employed or get a pension and the interest you earn exceeds your Personal Savings Allowance, HMRC will automatically collect the tax you owe through your pay-as-you-earn (PAYE) tax code.

If you are self-employed and fill in a self-assessment tax return, you must include your total interest income savings excluding interest received from ISAs (see below).  You’ll also have to register for self-assessment if your income from savings and investments is over £10,000.  You can visit the Government website to check if you need to complete a tax return.

If you are neither employed or self-employed and don’t have a pension income, HMRC will review the interest you have earned and let you know if you need to pay any tax and how to pay it.

If the interest you earn exceeds your allowance, you will be charged income tax at your usual rate.

See the HMRC Guidance for more information.

Show FAQ - What about the Personal Savings Allowance and joint accounts?

If you share a joint account, the interest you earn will be divided equally (unless you tell HMRC otherwise) between your individual Personal Savings Allowances.

Show FAQ - Where can I find details of my interest?

If you have an account with a passbook then your interest received will be shown in your passbook when it is updated.  If your account with us does not have a passbook then we will send you a statement annually which will include details of your interest.

Interest on most of our accounts is paid annually on 31 December.  Accounts that do not pay interest on 31 December include accounts where interest is paid monthly, 1 Year Fixed Rate accounts and ISAs (see below).  If you need any more information, including for closed accounts, visit your local branch or contact us.

ISAs: Tax-Free Accounts

Unlike many other ways of saving, interest earned from an ISA does not count towards your Personal Savings Allowance.

The maximum you can invest in the current tax year is £20,000 (less any amount invested in a Stocks and Shares ISA, Innovative Finance ISA and/or Lifetime ISA in the same tax year).

The total amount paid into any ISAs will be added together and go towards your total ISA allowance of £20,000 in the current tax year.

Interest on ISA accounts is normally paid on 5 April each year.

Full details of our currently available ISA Accounts can be found here https://www.mansfieldbs.co.uk/saving/isas/.

Spousal ISAs

When an ISA holder passes away, their account can still benefit from the tax-free status until the completion of the deceased’s estate, closure of the account, or on the third anniversary of the death of the account holder – whichever is soonest.

If the deceased had a spouse or civil partner living with them, they may be entitled to open a Spousal ISA. If the spouse or civil partner chooses to open a Spousal ISA, then we’ll let them know how much they can invest in their own name.

This is known as Additional Permitted Subscriptions and will not count towards any current tax year subscriptions.

The time limit for investing in a Spousal ISA ends 3 years after the date of death, or 180 days after the administration of the estate is complete, if this is later.

We offer Spousal ISAs and if you would like to find out more information please get in touch on 01623 676350 or complete an online form to contact us.

 

The Common Reporting Standard

Some customers may be required to pay some, or all, of their tax to a country outside of the United Kingdom (i.e. where you are a tax resident elsewhere).

To ensure transparency between participating countries, the Common Reporting Standard (CRS) requires governments around the world to exchange certain financial information in an effort to end tax evasion.

To remain compliant with this regulation, we will ask you a few questions when you open an account or change some of your details.  These questions will be about your tax residency and particularly whether you are a citizen of the United States of America.

 

Your tax and savings situation is individual to you and it is your responsibility to pay any tax due.  Tax rules may be subject to change in the future.  This webpage is not tax advice and Mansfield Building Society cannot provide tax advice.  However, we will try and help with any queries you may have.

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