Income Tax Act 2007 section 11D

Income charged at the savings basic, higher and additional rates

Section 11D establishes that savings income is taxed at its own set of rates — the savings basic rate, savings higher rate and savings additional rate — rather than at the general or default income tax rates that would otherwise apply.

• Savings income that would otherwise fall into the basic rate or default basic rate band is instead charged at the savings basic rate; savings income in the higher or default higher rate band is charged at the savings higher rate; and savings income in the additional or default additional rate band is charged at the savings additional rate.
• These savings rates only apply after the starting rate for savings and the savings nil rate (the personal savings allowance) have been taken into account, so income already taxed at those preferential rates is excluded.
• The rules are subject to any other Income Tax Acts provisions that may impose different rates in particular circumstances, but they take priority over the general rate provisions for individuals and the default rate provisions for non-UK residents.
• For Scottish taxpayers, references to what rate would "otherwise" apply are read as if the individual were not a Scottish taxpayer but were UK resident, ensuring that the savings rates are determined by reference to UK-wide rate bands rather than Scottish rate bands.