An online calculator has been launched to help people see if they are eligible for the new 0% savings tax rate, the Chancellor George Osborne has announced.
At Budget 2014, the government announced that the 10% starting rate of tax for savings would be replaced with a new 0% rate from 6 April 2015. This will mean that people earning under £15,600 each year will get their savings interest paid tax-free.
The amount of savings applied to the starting rate will also be increased from £2,880 to £5,000.
It is estimated that 1 million savers earning less than £15,600 a year will be able to get tax-free interest on their savings. A further 500,000 people will be able to reclaim some of the tax previously paid on their savings interest.
Savers will be able to check their eligibility by using HMRC’s new online calculator. If they qualify for the tax-free savings, savers should register their account with their bank. If eligible to reclaim previously paid tax on interest, they will need to fill out form R40 or include the figures on their tax return.
Chancellor George Osborne said:
“One month from now, the lowest earners can get their savings interest tax-free.
“This will provide a massive boost for 1.5 million savers across the country, putting money in the pockets of those who need it most.”