Personal Savings Allowance

HSBC UK
Savings accounts
Personal savings allowance

Overview

From 6 April 2016, most UK taxpayers will have a new Personal Savings Allowance (PSA). This means that up to £1,000 of income from savings (e.g. any credit interest earned) will be tax-free for basic taxpayers, and up to £500 of savings income will be tax-free for higher rate taxpayers. Additional rate taxpayers will not be entitled to any PSA.

We are currently required to take basic rate tax from your savings interest. From 6 April, we will stop doing this.

There is no action for you to take. If you have savings income below your new Personal Savings Allowance you will have no tax to pay.

If your savings interest exceeds your Personal Savings Allowance, where possible HMRC will collect any tax you have to pay automatically through a change to your tax code based on information provided by banks and building societies.

If you currently complete a Self Assessment tax return you should continue to do so.

For further information about these changes, go to the HMRC website, and / or seek further advice from your accountant or tax advisor.

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Frequently Asked Questions

The following questions and answers should help if you receive credit interest on your accounts.

Savings income includes:

interest from banks, building societies and other account providers (such as credit unions and NS&I)
interest distributions (but not dividend distributions) from authorised unit trusts, open-ended investment companies and investment trusts
income from government or company bonds
some types of purchased life annuity payments and gains from certain contracts for life insurance

Accounts paying annual credit interest (such as Regular Saver or Fixed Rate Saver), which mature up to and including 5 April 2016, will receive net credit interest at maturity, unless you have registered to receive gross interest by completing either a Form R85 or Form R105. Customers with accounts paying annual credit interest, which will mature on or after 6 April 2016, will automatically receive gross credit interest.

Accounts paying monthly credit interest will receive net credit interest on payments made up to and including 5 April 2016, unless you have registered to receive gross credit interest by completing either a Form R85 or Form R105. Credit interest payments made on or after 6 April 2016 will automatically be paid gross.

Banks and building societies will still be required to take tax from any compensation interest paid. You may be able to claim the tax back by filling in form R40 (or form R43 if living overseas) and sending it to HMRC. These forms are available online at GOV.UK.

From 6 April 2016, banks and building societies will pay credit interest with no tax taken off. However, you may still receive other types of savings income with tax taken off (for example: interest distributions, but not dividend distributions, from authorised unit trusts, open-ended investment companies and investment trusts). You may be able to claim this tax back by filling in form R40 (or form R43 if living overseas) and sending it to HMRC. These forms are available online at GOV.UK.

Only individuals get a Personal Savings Allowance.

If your accounts relate to a business, charity, club or association, they will automatically receive interest without tax taken off from 6 April 2016.

If you are a trustee or are administering an estate, we will no longer deduct tax from the credit interest we pay, so any tax due will have to be paid through the trust/estate tax return, where appropriate.

Overview

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Frequently Asked Questions

What is savings income?

Does income from my Individual Savings Account (ISA) count towards my Personal Savings Allowance?

How will the way I am paid credit interest on my accounts change?

Will the changes affect savings income I received before 6 April 2016?

Do I need to tell HSBC about other savings income or my tax rate?

I registered my account to receive interest without tax taken off, what do I need to do now?

What about interest paid on PPI and other compensation payments?

How do I claim back tax paid on other savings income?

My accounts relate to a business / a charity / a club / an association / I am a trustee / administering an estate what will this mean for them / me?

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