Tax on savings income

Savings income (which includes all types of interest) paid net is taxed usually at source at 20%. Dividends on UK  equities carry a (non repayable) tax credit of 10%. The intention is that only higher rate taxpayers should have to pay any additional tax, although 'starting rate' and non-taxpayers may be entitled to claim a tax refund. From 2009/10 the starting rate of 10% applies only to savings income up to £2,440. If non savings income exceeds this, no 10% rate applies.