The additional annual personal savings allowance is a welcome bonus, and at current interest rates on easy access accounts, this could mean that savings of around £60,000 (basic tax rate) or £30,000 (higher tax rate) may not incur a tax liability for the current highest paying accounts at 1.65% interest (www.moneyfacts.com).
However, this is not the only tax allowance for savers, there are a couple more than we have had for many years which are worth reminding everyone about:
ISAs - an ISA is a tax allowance enabling qualifying investments to earn interest and grow free of tax. The current annual ISA allowance is £15,240.
Pensions - subject to annual and lifetime allowance limits, savings into pensions are currently not only tax free on entry, but include tax relief so pensions can grow tax free too.
And there are others too, such as in April, those with investments can accumulate £5,000 of dividend income without incurring tax. There are also a number of allowances around inheritance tax planning, Help to Buy ISAs (for first time house buyers) and some more specialist areas such as venture capital trusts and enterprise investment schemes.
So when looking to make the most of this new savings allowance, we shouldn't forget to review all relevant tax reliefs and allowances.
The taxman has given Times Money further details of the personal savings allowance that will, from April 6, allow basic-rate taxpayers to earn £1,000 of interest on savings accounts each year with no tax payable. Under the rules, announced in the March 2015 budget, higher-rate taxpayers will be able to earn £500 of savings interest before owing tax on it, but additional-rate taxpayers will not benefit from the allowance.