The government is set to introduce a new personal savings allowance from 6th April 2016.
The allowance will enable basic rate taxpayers to receive up to £1,000 of savings income tax-free, whilst 40% taxpayers will be able to receive up to £500, resulting in a tax saving of up to £200 per year.
Because so many people will no longer pay tax on their savings, the automatic deduction of tax by banks and building societies will no longer be necessary.
Please note that the savings allowance will not be available to additional rate taxpayers, i.e. those with taxable income in excess of £150,000 per year.