From 6 April 2016, HMRC introduced the Personal Savings Allowance (PSA). This means that basic rate taxpayers can earn £1,000 of interest per tax year before paying tax on interest. For higher rate taxpayers this allowance will be £500 per tax year. There'll be no PSA for additional rate tax payers. Interest earned on ISAs won't count towards your PSA, because it's already tax-free.
Interest without tax deducted
The government also introduced new rules to support the PSA, which means that banks and building societies will no longer deduct income tax from interest earned on non-ISA savings and current accounts. Interest earned on ISAs has always been tax-exempt.
Who will be effected by the changes?
With the exception of Sole Traders and Partnerships, we already pay interest without tax deduction to our business savings customers. Therefore, the change will only effect you if you are a Sole Trader or form part of a Partnership.
Do I need to do anything?
You won't need to do anything to receive interest without tax deducted, this will happen automatically from 6 April 2016.
If the interest you earn on accounts you hold with Nationwide and any other provider(s) is more than your PSA, tax may be due and will need to be paid to HMRC. HMRC will normally collect the tax by changing your tax code. See HMRC's PSA page for more information.
If you want to know the total interest we've paid on your account, you can request a Section 975 tax certificate for the 2015/16 and previous 6 tax years.
For the tax year 2016/17 and subsequent years, Section 975 certificates will be replaced by Interest Certificates. If you need an Interest Certificate, or a Section 975 certificate for a previous tax year, you can request one by calling us on 0800 66 55 11.