Taxation

HM Treasury written question – answered on 26th February 2016.

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Photo of Philip Davies Philip Davies Conservative, Shipley

To ask Mr Chancellor of the Exchequer, if he will make an assessment of the effects of the tax treatment of interest payments on tax revenues.

Photo of David Gauke David Gauke The Financial Secretary to the Treasury

HM Revenue and Customs publishes data on income tax liabilities which includes tax on savings:

https://www.gov.uk/government/statistics/income-tax-liabilities-by-taxpayers-marginal-rate

Table 2.6 shows that total tax liabilities on savings income in 2015-16 is expected to be £2,324m. These estimates are based on the 2012-13 Survey of Personal Incomes. They are projected to 2015-16 using economic assumptions consistent with the Office for Budget Responsibility’s March 2015 economic and fiscal outlook.

Savings income is not exclusively interest as it includes other forms of income such as bond yield and purchased life annuity payments.

On 6 April 2016, a tax-free Personal Savings Allowance (PSA) will be introduced for savings income (such as interest) paid to individuals. Broadly, this means that basic rate taxpayers will be able to receive up to £1,000 of savings income, and higher rate taxpayers can receive up to £500 of savings income, without any tax being due. The PSA will not be available to any saver with additional rate income.

No overall assessment of the implications of the tax treatment of interest payments on tax revenues, across the various taxes, is available.

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