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What does the Personal Savings Allowance (PSA) mean for how we pay interest?

What does the Personal Savings Allowance (PSA) mean for how we pay interest?

Up to 5th April 2016, Banks & Building Societies are required by the UK Government to deduct basic rate income tax (20% tax) from their customers' savings interest.

From 6th April 2016 all Banks & Building Societies are required to stop doing this and will pay all credit interest gross of tax (i.e. no tax taken off). Previously interest was paid net (after 20% tax was taken) unless an R85 form (for UK residents) or R105 form (for non-UK residents) was completed - these forms are no longer needed as all credit interest will be paid gross.

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