Financial year that is. Wednesday 6th April sees a considerable savings shake up with the launch of the personal savings allowance (PSA) which means most people will no longer pay tax on their savings interest.
At present, except if you’re saving in a Cash ISA, when you earn interest, the taxman takes part of your earnings. So for every £100 interest earned, if you’re a basic rate taxpayer, you only actually get £80. Higher rate taxpayers would only get £60.
But from Wednesday, the PSA means you get to keep all your interest up to £1,000 annually for basic rate taxpayers and £500 for higher rate taxpayers.
So, good news for savers as you’ll be able to keep more of your hard-earned cash.
Today’s low interest rates however mean that, however welcome the PSA is, you’re not likely to make a fortune from the change.
Savers and investors who aren’t just saving for a couple of years – for example, for a house deposit – and who can put aside money for a longer period of time, for example at least five years, may want to consider stock market investments as a way of potentially growing their money.
Investing in shares means your investment could go down as well as up and you are not guaranteed to get back your original investment, whereas your capital is guaranteed in deposit accounts. Tax treatment depends on individual circumstances and tax law may change in the future.