Income Tax Act 2007 section 12A

Savings income charged at the savings nil rate

Section 12A provides that a portion of an individual's savings income may be taxed at the savings nil rate (0%) instead of the normal income tax rates, up to the amount of their personal savings allowance.

• Where an individual's taxable income (after allowances) exceeds the starting rate limit for savings, any savings income above that limit may qualify for the savings nil rate
• If the savings income above the starting rate limit is less than or equal to the individual's savings allowance, all of that savings income is taxed at 0%
• If the savings income above the starting rate limit exceeds the savings allowance, only the amount up to the savings allowance is taxed at 0%, with the remainder taxed at normal rates
• Other provisions of the Income Tax Acts may override these rules and apply different rates in certain circumstances