Our Blog page banner

Changes to the starting rate for savings from the 6th April

Starting Rate for Savings from 6 April 2015


From 6 April 2015, many more people will no longer be liable for tax on their savings income.   This is most likely to affect people with low overall incomes, or whose income is mainly from their savings


The starting rate of tax for savings income (such as bank or building society interest) will be reduced from 10% to 0%, and the maximum amount of taxable savings income that can be eligible for this starting rate will be increased from £2,880 to £5,000.


Registering for interest payments without tax deducted (Form R85) from 6 April 2015


If a saver’s total taxable income will be below the total of their personal allowance £10,600 plus the £5,000 starting rate limit for savings they can register to have interest paid on their accounts without tax deducted, using form R85.

Details of what is taxable income can be found at: http://www.hmrc.gov.uk/incometax/taxable-income.htm


 If the total of your taxable income for 2015-16 will be:

·         below £15,600, you will not be liable to pay tax on any of your savings income in this year.

·         more than £15,600, but your non-savings income (such as earnings or pensions) will be less than £15,600, you will not be liable to pay tax on part of your savings income. This will be the amount of your savings income that - when you add it to your other taxable income - comes to £15,600.

·         more than £15,600, there will be no change and your savings income will continue to be liable to tax .

If you do not expect to have to pay tax on part of your savings income, you should not register with your bank or building society to receive interest without tax deducted using form R85. Tax will continue to be deducted from your taxable interest payments at 20%, but you will be able to reclaim overpaid sums from HMRC, under Self Assessment, or using the R40 form.

If you have more than one account, you are not entitled to register only some of your accounts to receive interest without tax deducted – even if you expect the interest you get from those accounts to not be liable for tax.