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Most people unaware of the new personal savings allowance


Up to 90 per cent of people are unaware of changes to the new personal savings allowance, despite it coming into effect in less than one month time.

The figure was uncovered by AA Financial Services, who conducted a study on people’s knowledge of the impending changes to the personal savings allowance.

There will be several major changes to savings and taxation on 6th April, including a new personal savings allowance.

This personal savings allowance will mean that some savers will no longer pay any tax on the interest that they earn on their savings. The level of savings allowance a person receives depends on their tax band, for example:

- Basic-rate tax payers will not pay any tax on the first £1,000 of the interest on their savings
- Higher-rate tax payers will have an allowance of £500
- Additional-rate tax band will not receive a personal savings allowance

Due to a combination of the personal savings allowance and the 0 per cent tax band on savings, those who earn less than £17,000 a year will not pay any tax on their savings interest.

Deeply confusing

As part of the study, the changes were explained to the respondents. However, 49 per cent of people were unsure of where to save their money as of 6th April. This was largely because of the choice of saving into an ISA or outside of an ISA, which will both offer tax-free savings advantages.

Susan Hannums, director at claimed that HM Revenue and Customs (HMRC) and banks should be doing more to inform the public about the changes.

Hannums stated: “It’s deeply concerning that one of the biggest changes in a generation for savers is almost upon us and savers still seem grossly uninformed.

“Between HM Treasury and the banks and building societies, more visible and useful information needs to be made available to savers to help them through the transition."

She went on to say that while some banks do provide “well produced, detailed brochures”, others simply “a few lines in generic customer communications”.

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If you have any personal finance questions related to this news article, then please contact our financial advisers. You can get in touch by asking a question online, calling us on 0800 092 1245, or by arranging a visit.

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