While the rise in interest rates is welcome to many, savers are facing the prospect of paying tax on their savings for the first time in some years.
Rises in salary earnings are also pushing a larger number of people into the higher rate or additional rate income tax band, effectively leaving them with no room to make significant tax-free savings.
Those who are basic rate taxpayers can earn up to £1,000 in savings interest per year without paying tax. Higher-rate taxpayers have an allowance of £500 in tax-free interest earnings.
However, additional-rate taxpayers have no allowance. These allowances cover interest earned from bank and building society accounts, bonds, and gilts. Dividend income from shares is dealt with via a separate allowance, which is also being cut from £2,000 to £1,000 in the new tax year.
Interest saving rates have risen from around half a per cent to just under three per cent on typical savings accounts and ISAs.
The turnaround from moribund rates to those delivering a more substantial return has meant the amount of money invested that then attracts tax has dropped significantly.
Advisers are urging savers to make use of the annual ISA allowance that allows savers to deposit up to £20,000 per year to offset possible payment of tax on savings-related earnings.
If you need more information on how these issues affect you and your tax bill, then it’s best to speak to an Independent Financial Adviser.
Our BLOG
How to budget for life after work – Our retirement advice
TESTIMONIALS
The staff at CST are always very friendly and approachable.… Read more “Mr JD Dolling, SW Heating Equipment Ltd”
We have been with CST for more than seven years… Read more “Doris Francis, Engineering Services (Bridgend) Ltd”
Our business has been handled by CST for many, many… Read more “Mr & Mrs Rise”
I moved my business to Clay Shaw Thomas because I… Read more “Sandra Wilkinson of Sage Marketing”
The audit was well planned and executed efficiently, with minimum… Read more “GE Carpentry”
Privately and within the company Clay Shaw Thomas provides a… Read more “Seashore Enterprises”
I am very happy with the service from CST. An… Read more “Mr Atkinson “
The family connection with CST goes back many years and… Read more “Dr Jones”
CST are very efficient, courteous and proactive when dealing with… Read more “Mr CMG Adams”
I have been a client for over twenty years and… Read more “Mr J T Wall”
Always one step ahead of the game, CST have helped… Read more “Mr RT Evans”
CST Staff always give unbiased advice in a clear and… Read more “Mr L Branfield”
It has been a professional pleasure working with CST, they… Read more “Mr P Jenkins”
SUBSCRIBE to our list
If you would like to see full details of our data practices please visit our Privacy Policy and if you have any questions please email info@cstwealth.co.uk.