“Nearly 1.8mn savers trigger tax penalty on cash savings interest”

Like love, stealth taxation is all around us. Those oh-so-reluctantly given public-sector pay rises will be in part repaid by increased tax, with allowances frozen and many more being pushed into the 40% (or for some, just the 20%) tax band. With interest rates at 1%, you wouldn’t have been likely to pay tax on your interest unless you had £100k or more in a bank deposit account. At 4 or 5%, that comes down to as little as £20k, £10k if you’re a high rate taxpayer (when you’re only allowed £500 of interest tax-free) after which those rates aren’t in reality quite as good as they sound. Which makes Premium Bonds and their tax-free prizes seem a still-better bet. As previously trailed, an awful lot of those who’ll have to pay some tax won’t have a clue that they should and almost certainly won’t be completing a tax return at the moment. Which will be a dilemma, not just for them, but for the taxman, too.

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