Interest paid tax-free

itm2

For the last year I've been having interest paid from my bank free of tax, as I took early retirement in 2013 and will not be drawing an income from my pension until late in the 2015-16 tax year (so in a week's time I will start to become liable for tax on the interest if, as expected, my pension income exceeds my personal allowance). The interest amounts to about £800 annually.
Starting from the 2016-17 tax year I understand that the first £1k of savings interest will be tax free under new HMRC rules, regardless of other income, so my question is: am I legally bound to tell my bank to start deducting interest at source for the 2015-16 tax year (rather than declaring it on my end-of-year tax return and paying the tax retrospectively)? Since this will only apply for one year (until the new HMRC rules become effective) I was hoping that I could leave the arrangements as they are for the coming year.

[Deleted User]

Hi,

are you acquaint with the changes coming in next week, you might be ok.

Archi_Bald

For 2015-16, you still have to pay tax if your total income exceeds your allowances (personal allowance plus savings allowance). You can use this HMRC calculator to figure out what applies to you.

From April 6 2016, unless overturned by the new Government, you will be entitled to £1,000 free interest.

itm2

[Deleted User] wrote:

Hi,

are you acquaint with the changes coming in next week, you might be ok.

I wasn't aware of that. Is it the £15,600 threshold that's new for 2015-16?

Many thanks - it seems that I can continue to receive my interest tax free next year!

[Deleted User]

Hi,

there was a similar thread a wee while ago, have a read.

bowlhead99

itm2 wrote: »

I wasn't aware of that. Is it the £15,600 threshold that's new for 2015-16?

Many thanks - it seems that I can continue to receive my interest tax free next year!

The thing new for £2015-16 is that everyone has a £5000 wide 0% band for savings only, on top of the usual personal allowance of £10,600 that is a 0% band for everything. So if your total income including savings is less than £15600 you won't have to pay tax on any of your savings income this year.

itm2

That's great news - many thanks to all