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What does the Personal Savings Allowance (PSA) mean for how we pay interest?

Up to 5th April 2016, Banks & Building Societies are required by the UK Government to deduct basic rate income tax (20% tax) from their customers' savings interest.

From 6th April 2016 all Banks & Building Societies are required to stop doing this and will pay all credit interest gross of tax (i.e. no tax taken off). Previously interest was paid net (after 20% tax was taken) unless an R85 form (for UK residents) or R105 form (for non-UK residents) was completed - these forms are no longer needed as all credit interest will be paid gross.