What happened to higher Personal Saving Allowance?

YorkieMan

In the 60 seconds on tax-free savings article (this site June 2015 by Helen S) it was stated that those eligible for the savings allowance this year would be able to get a higher savings allowance for 2016/17 of £2000. Now it's all gone quiet about this. Is it going to exist or not?

Archi_Bald

AFAIK, no government document ever talked about a £2,000 savings interest allowance.

Malthusian

Nothing I've heard of either. The only context in which I can imagine a figure of £2,000 being mentioned is for a couple who were both basic rate taxpayers; they would have a £1,000 band each, so they would be able to receive up to £2,000 in interest between them before having to pay tax.

I certainly haven't heard of any individual being able to have a savings allowance of £2,000.

PeacefulWaters

Are we talking about the £5,000 allowance over and above the threshold that allows low earners to pay no tax on savings interest?

bigfreddiel

PeacefulWaters wrote: »

Are we talking about the £5,000 allowance over and above the threshold that allows low earners to pay no tax on savings interest?

Not so strangely, no one I've mentioned this to have ever heard of it! When I explain they either don't believe me, or say it's too difficult to understand. Yet these very same people are happy to moan about how little disposable income they have, or how expensive day to day living is when they could actually do something about it.
With a little bit of juggling I've managed to increase my household by about £300/month, and at the same time reduce our tax liability. It's not hard, if I can do it so can anyone else.

Cheers fj

YorkieMan

I have a screen print of the article from this site - I'll post an image.

bowlhead99

PeacefulWaters wrote: »

Are we talking about the £5,000 allowance over and above the threshold that allows low earners to pay no tax on savings interest?

Yes, it was taking about that group of people.

The old version of the article was poorly structured, but basically suggested: there will be a £1000/£500 allowance in the pipeline for 2016 but not just yet, and a zero starting rate on savings income (effectively saving £1000 of tax on £5000 of interest income) is to help people before that.

It went on to say that the new £1000/£500 personal savings allowance coming in April would supersede the zero starting rate thing BUT anyone who would have still qualified under the "starting rate rules" could take a higher, £2000, personal savings rate allowance instead of the standard £1000 one which other basic rate taxpayers get.

This speculation I think had resulted from misinterpreting some government soundbite about how people in the £10600-£15600 bracket could "save £1000 of tax" (zero rate allowance on £5k of interest), and "get £1000 of interest without paying tax" (new standard personal savings allowance). Adding together the £1000 of apples with the £1000 of oranges and saying it amounted to a special rate of £2000 of oranges for the people who qualified.

Now as we get closer to the new financial year, it is clear that the £5000 zero rate band for £10600-£15600 earners isn't going away, and the £1000 allowance will effectively be additive to the £5000 zero rate band.

The article has been updated to change the previous

"However, that doesn't come into effect until April 2016, so this measure's to help people on low incomes before that.

Then from next April the personal savings allowance will supersede these tax free savings rules BUT anyone who still qualifies under these tax free savings rules will get a higher £2000 personal savings allowance for that that year instead of the £1000 that will apply for other basic rate taxpayers"

Into the correct version:

"However, that doesn't come into effect until April 2016, so this starting savings rate is to help people on low incomes before that.

Then from April the personal savings allowance will add to these tax free savings rules. You'll still be able to earn £5000 without paying tax, if you're on a low income, but you'll also pay no tax on the next £1000 of savings interest -as you use up your personal savings allowance (assuming you pay basic rate tax). "

Clear as mud?

But basically the old £2000 they thought might happen turns out not to be happening; they had misunderstood the soundbites and the government hadn't initially been massively clear on what would happen to this starting rate for savings income once the proper savings allowance was in place. If you are one of the people affected, you're better off than the old MSE article said you'd be.

You can pull up an old version of the article by putting the article's URL into the Wayback Machine at http://archive.org

YorkieMan

Seems I cannot post a screen shot as the Forum thinks there is a hyperlink in it. It's a .jpg with no live links so I'm stuck. Any ideas anyone?

YorkieMan

Looks like bowlhead99 got there first. Many thanks.

bowlhead99

YorkieMan wrote: »

Seems I cannot post a screen shot as the Forum thinks there is a hyperlink in it. It's a .jpg with no live links so I'm stuck. Any ideas anyone?

For future reference

The forum here doesn't host users' images, only displays things by you posting a URL to another site where the image is located. To show us a picture you can host an image on a content sharing site like imgur.com by uploading it to their server and they will give you a temporary URL.

You could then give that to us here, although as you are a new ish user and not allowed to post links you would have to obscure the URL a bit and tell us how to get there.

However, in the time you've been looking into it, I found an archived version of the page and answered your question above

Archi_Bald

It can be dangerous to rely on an article you saw on an internet site.