New Tax Allowance for Savings Income


From 6 April 2016 a 0% rate will apply to savings income of up to £1,000 and, in line with this, from the same date, banks and building societies will no longer deduct tax from the interest they pay to depositors who hold Non-ISA accounts.

The introduction of the new Personal Savings Allowance (PSA) will mean that basic rate taxpayers can receive up to £1,000 interest on their savings before tax is due, and higher rate tax payers can receive up to £500. The new rate will not apply to additional rate taxpayers.

For savings income received in excess of the PSA, HMRC will include taxable savings income in the PAYE code and collect the tax through either the PAYE system or self-assessment.

HMRC have also published a consultation document which invites discussion on the deduction of income tax from other savings income. This consultation closes 18 September 2015.

For more information please contact Green & Co.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

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0% Starting Tax Rate Consideration


As of the 6 April 2015, the starting rate of tax on savings income has been reduced to 0%, and the starting rate band has increased from £2,880 to £5,000. The starting rate is available to people whose gross non-savings salary is less than their personal allowance plus the starting rate band. Therefore, for 2015/16 the total would be £15,600 which is the personal allowance of £10,600 + £5,000 starting rate band. This means if your total gross income is not more than £15,600, you will not have to pay tax on your savings income.

The form you would need to complete, to make the banks aware, is the reformed R85 form. This can be found on HMRC website here.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

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Nick Park analyses the Budget on BBC Radio Wales

To find out what other announcements were made in  the Chancellor’s Budget, read our Budget Summary.

Budget 2015 and 2015/16 Tax Tables

Our updated Tax Tables are available here – find out what the new rates mean for you.

If would like to  read our summary of the 2015 Budget, then please follow this link: Budget Summary 2015

The main issues include:

Farmers averaging – Farmers will be able to average their profits over five years instead of just two from April 2016.

Employer’s national insurance allowance – The employer’s national insurance allowance of £2,000 has been extended to 2015/16. Make sure you claim this on your payroll.

Help to Buy ISA – A new Help to Buy ISA will be introduced with the government providing a £50 bonus for every £200 of monthly savings up to a maximum of £3,000 on £12,000 of savings. The aim is to start the scheme from Autumn 2015.

Deeds of variation – The government will review the use of deeds of variation for inheritance tax planning.

For more tips, refer to the ‘think ahead’ boxes of our guide.

Please contact us if you need more information on these changes, or any other matter.

Tax-Free Childcare

The Government is proposing a new Tax-Free Childcare scheme which will help around 2.5 million working families, which was one of the major announcements in the 2013 budget.


Eligible families will get 20% of their annual childcare costs up to £6,000 per child, paid for by the Government. This is a potential saving of £1,200 per child, per year.


The scheme will be phased in from Autumn 2015 and will replace the existing childcare vouchers programme, which is currently offered by fewer than 5% of employers.


In order to eligible for the scheme both parents must be working, or one parent works in single parent families.

The scheme is open to employed and self-employed parents.

Initially, it will cover children up to 5 years old, but will build up over time to include all children under 12.


Yes, each parent must earn less than £150,000 a year.

The scheme will be unavailable to those who receive tax credits (or Universal credit when it comes into force).


Full details of the Tax-Free Childcare will be set out following consultation but it is expected that parents will have an online account and their payments will be topped up by the Government.

Tips for Small Businesses to Avoid Liquidation

Liquidation is a type of insolvency proceeding that applies only to companies, according to the Insolvency Service. It is distinct from bankruptcy, which is limited to individuals. Liquidation requires a liquidator who will “wind up” a limited company’s legal affairs by performing a series of specific steps. The company will cease to exist once this process concludes.

Small companies are more vulnerable to liquidation due to crippling debt, especially during the start up phase. This can occur even when the company receives backing from a venture capitalist if the company’s burn rate is unsustainable. The owner of a small company can reduce the chances of liquidation by following some basic tips on debt management.

Used Equipment

A small company can often reduce its start up costs substantially with used equipment. Furniture in particular is much cheaper when used, resulting in a savings of as much as 75 percent. Used equipment should not impact your business so long as it is functional.


You should already have personal savings accumulated before you start your company. However, you should bear in mind that using your own money to finance your company can be a risky strategy as new businesses often fail despite your best efforts. If your company is successful, you can pay yourself back after the business begins making a profit.

Friends and Family Members

Friends and family members are a source of financial backing that business owners often overlook. They will often invest in a small business that is too risky for banks and other financial institution. Friends and family members will have a vested interest in helping you succeed since their money is invested in your business venture.

Angel Investors

An angel investor is also an effective method of reducing your company’s debt. These investors receive a share of your company in exchange for equity in that company. They may also have a certain degree of operational control over that company. You can use angel investors to network with other business owners in your niche, which can be an invaluable source of information for a small business.

Market Research

It is essential to perform adequate market research if you want your small business to satisfy accrued debts quickly. Lack of market knowledge in your niche is the single largest cause of a company’s liquidation. Market research includes reading trade journals and studying existing companies in your niche.

Personal Income

You should maintain your regular job as long as possible while starting your new company. Small business owners often work on their new business at home after they finish their day job. This allows you to increase your working capital instead of accruing more debt.

Sharing Costs

Small business owners can often share operating costs with other small businesses in the area. You will often be able to obtain a volume discount by combining your orders with those of other businesses. You may also be able to share resources such as Internet access or storage areas.


A small business often does not require some types of equipment. Ensure that you will actually need office machines right away before you commit to a long lease. In addition, small businesses do not typically require a large inventory of office supplies.


It is important to be flexible when you own a small company. You will typically find that your business accrues much less debt when you run it as on online store rather than as a retail outlet. A brick-and-mortar business requires more capital investment and does not scale up easily as your company grows.