Budget Cheer For Bond Investors

BUDGET 2016: New tax-free allowance on savings and investment interest payments benefits fixed-income investors

Emma Simon 16 March, 2016 | 4:35PM
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Bond investors will receive a tax boost as a result of today’s Budget – allowing them to earn £1,000 interest a year, tax free.

The Chancellor George Osborne announced plans to “radically simplify” the taxation of fixed income funds. From April 2017, bond fund managers will stop automatically collecting 20% tax from their income payments to investors. 

This should bring the taxation of fixed income investment in line with cash deposits. The new savings allowance is being introduced for cash savers from April 6 2016. It means basic-rate taxpayers can earn up to £1,000 in interest in interest a year, tax free; for higher-rate taxpayers this will be reduced to £500. There is no tax-free savings allowance for additional rate taxpayers. Those receiving more will be obliged to declare this income on a tax return form.

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About Author

Emma Simon

Emma Simon  is a financial journalist, specialising in investment and consumer issues, writing for Morningstar.co.uk

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