HMRC has updated the Personal Savings Allowance (PSA) guidance, providing information on tax-free products that do not count towards a PSA, which was introduced by government in April earlier this year
The PSA guidance explains that interest from Individual Savings Accounts (ISAs) does not count towards a PSA as it is already tax-free.
Other tax-free products that do not count includes interest from National Savings and Investments (NS&I), this is mainly fixed interest saving certificates and index-linked savings certificates, as well as prizes won from premium bonds.
Since PSA was introduced taxpayers have been able to earn up to £1,000 in savings income tax-free, with higher rate taxpayers earning up to £500 which has resulted in the majority of people no longer paying tax on savings interest.
Savings income counts as account interest from bank and building society accounts as well as accounts with NS&I.
A leaflet explaining the PSA was left at banks and building societies for taxpayers to pick up a month before it was implemented.
HMRC’s Personal Savings Allowance: latest information is available here.
