From 6 April 2016 the way savings are taxed is changing. From this date savings income will be (in most cases) received gross without the deduction of basic rate tax. The new personal savings allowance being introduced on that date allows basic rate taxpayers to receive up to £1,000 in savings income before tax is charged (higher rate taxpayers get a £500 band and additional rate taxpayers pay tax on all of their savings income).

Taxpayers moving between basic, higher and additional rate tax bands will find more savings income becomes taxable as it progressively falls outside of the personal savings allowance. Further, if a taxpayer is used to receiving refunds of tax deducted from savings income, as this income will now be received gross there is the possibility of facing a bill rather than a refund.

There are some measures available to help – ISAs for example.