The new savings rules came into being on the 6th of April this year. If you didn’t hear what changed you may have noticed it when looking at your bank statements. This is because interest paid into your account is now paid gross instead of net, with a 20% tax deducted.
The new rules allow you to earn up to £1,000 (if you are a basic rate tax payer) in savings income without paying any interest and if you have taxable income £17,000 or less you won’t pay any tax at all on your savings income
If you are a higher rate tax payer you are allowed to earn unto £500 in interest without paying any tax.
This new system is a big change from the old system where banks deducted the tax automatically. As a result of this, many people who shouldn’t have been paying any tax at all were unknowingly paying tax on their savings income.
Claim Prior Year Tax Back On Your Tax Return
As we speak, across the country many business owners and self-employed will be gathering their records to submit their personal tax returns for the 15/16 tax year.
If you expect to earn below the earnings limit for tax (£10,60 for the prior year) then make sure you gather all your bank statements to collar the interest income you earned in the prior tax year.
This can be included on a personal tax return and you can claim back the tax you paid.
Many entrepreneurs spend the first few years of their business venture living on shoe string budget to give their business the best chance of survival. Whilst claiming back interest won’t add up to megabucks it still makes a difference and every penny helps.
If your not sure what you need to information you need to claim back tax paid on interest then contact us to find out!