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July 11, 2016

Trusts & Estates: Personal Savings Allowance

From 6 April 2016, the Personal Savings Allowance (PSA) was introduced to enable basic rate taxpayers to receive up to £1,000 of savings interest tax free. Higher rate taxpayers will be able to receive up £500 tax free.

As a result of this, banks, building societies, and National Savings and Investments (NS&I) will no longer deduct 20% tax  on interest paid to account holders as most taxpayers will not be liable to tax on this income.

The PSA is available to individuals only, therefore trustees and personal representatives who previously did not complete a tax return or made informal payments to HMRC may incur new reporting burdens.

In light of this, HMRC have announced interim arrangements regarding trustee returns, returns for estates in administration, and payments made under informal arrangements.

For the 2016/17 tax year, HMRC will not require notification from trustees or personal representatives where:

  1. The only source of income is savings interest; and
  2. The tax liability does not exceed £100.

Where these conditions are not met, a trustee or personal representative will be required to submit a tax return to HMRC and pay the tax due.

Further information as regards to the new arrangements will be released in due course.

Contact us today to discuss your tax requirements.
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