Announced in last year's Budget, the new tax-free rate will apply for 1.5 million savers across the UK - savers who normally would have to to pay 10 percent on up to £2,880 of savings interest now will pay nothing on up to £5,000 earned in interest.
A healthy saving of up £500 in interest per year in tax is available as long as the savings account is registered with the bank or building society with form R85. Considering the current interest rates for most savings accounts in the UK, the amount of capital within the savings account would need to be fairly large.
Savers also reclaim any tax paid by using the form R40 or by completing a self assessment tax return.
Next month will also see the normal tax-free ISA limit being raised to £15,240 with the entire amount now allowed for either shares and cash or a mixture of any ratio of both.