With over 1.4 million people predicted to become higher-rate taxpayers by the end of the financial year, it’s crucial to understand your Personal Savings Allowance.
Last year saw savings rates skyrocket, as the market responded to 14 consecutive hikes to the Bank of England base rate. As a result, many savers may have been faced with a tax bill from HMRC as they earned enough in interest to breach their Personal Savings Allowance (PSA) – some for perhaps the first time.
While average savings rates seem to have cooled off from their recent peaks, they continue to sit higher now than a year ago.
This, alongside frozen income tax brackets, could see many more stung by a new or increased tax bill in the new fiscal year, beginning on 6 April. It therefore remains crucial to factor in the PSA when reviewing your finances in 2024.