Nationwide backs Mail campaign on to stop tax grab on savings

Nationwide has led a chorus of leading building associations who have called on the government to prevent troubled savers from being dragged into paying a stealth tax.

The current rules mean that any interest earned on savings over £1,000 – or £500 for those in the higher tax bracket – is subject to tax.

But rising interest rates mean that many with only modest savings will eventually do so.

Nationwide, Britain’s largest construction company, which is headed by Debbie Crosbie, along with Skipton, Coventry, Yorkshire and Leeds, have all backed the Daily Mail campaign demanding a reconsideration of Chancellor Jeremy Hunt.

Together, the top five building societies have £311 billion in savings deposits in Britain.

Tom Riley, director of retail products at Nationwide, said: “We are in favor of raising the tax-free threshold for savers, especially at a time when many households are struggling financially.”

Savers have been suffering for years from the almost zero interest rate. In 2016, then-Chancellor George Osborne introduced the tax-free Personal Savings Allowance – with thresholds of £1,000 and £500 – saying that those who have already paid tax on their salary ‘don’t have to pay a second time if they save’. It’.

Now rates are rising and that is good for savers. But it also means that what Osborne wanted to stop is happening, effectively punishing consumers for their frugality.

It means that more than 6 million people have to pay interest on their savings. Maitham Mohsin, head of savings at Skipton Building Society, said: ‘It would be great if the government would meet us half way through and look again at the limit on personal savings.’

In 2016, a base rate taxpayer could hold just under £70,000 – or about £35,000 for a higher rate taxpayer – without paying a cent in income tax.

But interest rates have risen sharply since then, as the Bank of England raised its key reference rate from 0.1% in December 2021 to 4.5%, and markets expect this to rise further to 5% by the end of the year. 5 percent.

Today, a base rate taxpayer would only need about £20,000 – or £10,000 for a higher rate payer – to pay tax.

Matthew Carter, head of savings at the Coventry Building Society, added: “Many savers who have worked hard to build up decent savings could well be faced with double taxation on both income and taxable savings, precisely in a time when their cost of living is rising. quickly due to inflation.’

Laura Suter, head of personal finance at AJ Bell, has described the frozen PSA thresholds as a ‘hidden tax on steroids’