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Great News for Savers from April 2016

Personal Savings Allowance

On 6 April, the Personal Saving Allowance (PSA) was introduced; giving savers an annual tax free allowance of up to £1,000 on the interest they earn on their savings. For 95% of us in the UK, this means we will get to keep all of our savings interest.
If that’s not great news, we don’t know what is!

How will the Personal Savings Allowance benefit me?

  • All banks and building societies, including Aldermore, will no longer deduct 20% in income tax from your non-ISA savings
  • If your annual income is less than £17,000, you get to keep all your savings interest and won’t have to pay tax on it
  • If you’re a basic rate tax-payer, with an income up to £43,000 p.a., the first £1,000 of savings interest you earn will be tax free
  • If you’re a higher rate tax-payer, with an income between £43,001 to £150,000 p.a., the first £500 of savings interest you earn will be tax free
  • If your annual income is more than £150,000, the Personal Savings Allowance won’t apply to you
  • Your Personal Savings Allowance is in addition to your annual ISA allowance and any interest you receive from ISAs doesn’t count towards your Personal Savings Allowance

What do I have to do?

  • If the interest you earn is less than your Personal Savings Allowance, you don’t have to do anything. Your bank or building society will automatically pay interest without tax taken off.
  • If the interest you earn is more than your Personal Savings Allowance, you’ll have to pay tax on the difference to HMRC, either through your tax code or on your tax return.

More great news: the Flexible ISA

You now have more freedom over managing your ISAs with the introduction of the Flexible ISA. Not all ISA providers offer them, but all our Fixed Rate and Notice Cash ISAs are flexible.

What does flexibility give me?

  • Before, if you’d saved your full ISA allowance of £15,240 for the tax year and then withdraw money, you were unable to put it back into your ISA. This meant that you'd have missed out on valuable tax free interest on the amount you'd withdrawn both in that year and in future years
  • The new Flexible ISA changes all that – in a nutshell, it allows you to withdraw money from your ISA and put it back in the same tax year without it counting towards your ISA allowance
  • This flexibility to withdraw and replace money also applies to your ISA savings from previous tax years
  • Help to Buy: ISAs  and Junior ISAs are excluded under the scheme rules, so our Help to Buy: ISA is not flexible

What do I have to do?

  • Nothing - all of your existing Fixed Rate and Notice Cash ISAs, and any new Fixed Rate or Notice Cash ISAs held with us automatically became flexible ISAs from 6 April, so you don’t have to do anything. If that’s not great news, we don’t know what is!