COMPLEX PERSONAL SAVINGS ALLOWANCE UNDER FIRE

摘要

There has been mixed reaction to the introduction of the tax-free personal savings allowance (PSA) with warnings that the change is over-complicated and will cause confusion for taxpayers who will also have to submit regular reports on savings income to the taxman if they are to avoid punitive penalties. From April 2016, the PSA will be set at £1,000 (£500 for higher rate taxpayers) for savings income or interest. This will replace deduction of income tax at source from savings interest. Taxpayers also need to take into account the tax-free £5,000 dividend allowance which replaces dividend tax credit from April 2016. In addition, the starting rate of tax for savings income is currently zero per cent.