Beware of the savings tax trap - that's what personal finance experts are warning us as interest rates go on the up. After around fifteen years of close to zero savings rates, a recent spike is a welcome change for many of Britain's savers - but it comes with one concern - here's everything you need to know to stay money savvy.
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00:00 3 million savings accounts are now at risk of losing money. Is yours one of those that
00:06 qualifies? Those of us with larger amounts of money put away are now at risk of having
00:10 to pay more tax. It's because the personal savings allowance, the amount of money we
00:15 can save each year tax-free, has been frozen. While higher interest rates of savings accounts
00:20 have largely been a welcome change, and it's due to the Bank of England's repeated hikes,
00:25 it means that those who aren't checking how much interest they've earned may be
00:28 surprised by extra tax payments. Your PSA allows you to save up to £1,000 a year in
00:34 tax-free interest if you're a basic rate taxpayer, or £500 if you're a higher rate
00:39 taxpayer. Additional rate taxpayers don't receive any allowance at all. According to
00:44 Adam Throer, head of savings at Shawbrooke, a basic rate taxpayer with £17,500 of savings
00:50 could end up paying tax on the interest earned. For those of us likely to go over the PSA,
00:55 ISA could be a wiser choice, according to the experts.
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