Income Tax on Savings and Dividends
You don’t pay tax on any income received within your ISA and on most National Savings & Investment products. For most other products interest on savings is taxed at 20% normally at source which means the tax is deducted before you receive the income. If you check your interest or dividend statement, you will normally see a tax credit showing the tax deducted.
From April 2015 the first £1,000 of interest received is now tax-free in addition to your personal allowance, meaning that many millions of people will receive their interest tax free although you may need to claim the tax back using HMRC Form R40. If you’re income is below £15,600, of which more than £5,000 is interest from savings, then you should pay no tax.
If you receive income on a joint account then, half of the income will be considered as yours and half as your partners.
Higher or additional rate taxpayers will need to pay more tax and normally you will do this through your self-assessment form.
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