UK Interest rates on the rise!
On the 16th June 2022 the Bank of England Monetary Policy Committee raised the base UK interest rate for the fifth consecutive time, lifting the rate to 1.25%, the highest base rate since 2009 when rates were slashed to combat the global financial crisis. A higher base rate filters through to individuals in several ways. One of which is in the form of higher interest rates on savings accounts.
In April 2016 the Personal Savings Allowance (PSA) was introduced for income from savings paid to individuals. The PSA is the amount of interest that can be earned before income tax is payable on the excess. Basic rate taxpayers have a PSA of £1,000 and higher rate taxpayers have a PSA of £500. Individuals paying additional rates of tax do not have a PSA.
At current interest rate levels, and with further rises anticipated through 2022. More people with cash savings will earn interest approaching and exceeding the PSA. They will be required to report their interest to HMRC. Cash management is an often-overlooked aspect of financial planning but there are ways to structure cash deposits tax efficiently and simplify how you report your interest to HMRC.
Need any advice?
If you would like to discuss cash management, financial planning more widely. Or if you need assistance in declaring your interest through a tax return please contact us or give us a call on 01903 534587.