Where income is mainly derived from savings, it is possible to enjoy tax-free savings income of up to £18,500 tax-free in 2019/20 in addition to that held in tax-free wrappers, such as individual savings accounts (ISAs).
Premium Bonds (PBs) are an investment product issued and maintained by National Savings and Investments (NS&I), which in turn, is backed by HM Treasury.
The taxation of savings income can be complicated as there are various allowances and rates that come into play. However, most people are able to enjoy savings income tax-free.
Individual Savings Accounts (ISAs) offer an opportunity to build up tax-free savings income, subject to certain limits. For those looking to put money away in an ISA in 2017/18, there are new limits and various different ISAs on offer.
From 6 April 2016 onwards, bank and building society interest has been paid gross without the deduction of tax. However, previously basic rate tax was deducted at source unless you were a non-taxpayer who had registered to receive your interest gross.