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Important changes to savings and interest paying current accounts

Personal Savings Allowance

Income tax will no longer be deducted from the interest you earn

We updated our account conditions on 6 April 2016 to explain we now pay your interest gross.

On 6 April 2016 , the Government introduced a tax-free Personal Savings Allowance on the interest you earn on your savings and interest paying bank accounts. This means:

  • The first £1,000 of savings interest that basic rate taxpayers earn and the first £500 for higher rate taxpayers is free from income tax.
  • Most people no longer pay tax on their savings interest.
  • It’s your responsibility to pay any tax you may owe directly to HM Revenue & Customs, according to your individual circumstances.

For more information, please visit www.gov.uk/hmrc/savingsallowanceInformation about the new Personal Savings Allowance on the HM Revenue & Customs website.

Flexible ISAs

From 6 April 2016, some of our cash ISAs now benefit from a flexible feature.

  • Following the introduction of flexible ISAs, you’re now able to withdraw and replace funds from some of our cash ISAs without affecting your yearly ISA allowance, providing you replace funds in the same tax year you withdraw them.
  • Your ability to withdraw and replace funds may be limited by the particular terms and conditions of your ISA, for example, if you have a Help to Buy: ISA
  • The flexible allowance from the withdrawal of prior year funds cannot be transferred between ISA providers. If you do not replace withdrawals before a transfer, the allowance will be lost
  • The ISA limit for the year still applies so you can only hold a maximum of £15,240 across your cash ISA, stocks and shares ISA and innovative finance ISA.

Innovative Finance ISAs

The Government introduced a new ISA called innovative finance ISA on 6 April 2016.

  • An innovative finance ISA allows interest and gains from peer to peer loans to qualify for tax advantages.
  • Lloyds does not offer this product however you are able to transfer in from and out to an innovative finance ISA.
How much is the Personal Savings Allowance?
  • Basic rate taxpayers: Up to £1,000 in savings income is tax-free
  • Higher rate taxpayers: Up to £500 in savings income is tax-free
  • Additional rate taxpayers: No Personal Savings Allowance
Do I need to do anything to claim my personal allowance?

No, we will pay gross interest on all of your savings and interest paying current accounts. This means that no tax will be automatically deducted from interest on your behalf.

If interest will be paid gross across all savings accounts, do I need an ISA anymore?

It depends on your personal circumstances. ISAs allow you to build up a pot of money over a number years which will be tax-free.

If the amount of interest you earn on your savings accounts is above £1,000 then you may be required to pay tax whereas any interest earned in an ISA is free from tax.

Which Lloyds Bank ISAs are flexible?

Cash ISA Saver and Instant Cash ISA are fully flexible. Fixed Rate Cash ISAs are flexible, however withdrawal charges apply.

Help to Buy: ISA does not have full flexibility as this is limited by product rules. See individual product conditions for full details.

Flexibility does not apply to Junior Cash ISA.

I have £25,000 in an ISA which I have built up over a number of years. Can I withdraw £20,000 and replace it or just the current tax year’s allowance?

You can replace the full amount as long as it is in the same tax year that it was withdrawn. You can also deposit up to the annual ISA allowance (less any amount invested in a stocks and shares or innovative finance ISA).

If I transfer my ISA to another provider, or transfer my ISA from another provider to Lloyds Bank, can I replace any previous years’ subscriptions I have withdrawn in the current tax year?

Any previous years’ subscriptions that have been withdrawn must be replaced before you request an ISA transfer. Current year’s subscriptions can be replaced following the transfer as long as they are replaced in the same tax year that they were withdrawn. You can also deposit up to the annual ISA allowance (less any amount invested in a stocks and shares or innovative finance ISA).

If I withdraw funds in one tax year, can I replace them in the following tax year?

Any funds withdrawn must be replaced in the same tax year otherwise you lose the allowance and future deposits will count towards the following tax year’s allowance.

Important legal information

Lloyds Bank plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 119278. Authorisation can be checked on the Financial Services Register at www.fca.org.ukVisit the Financial Conduct Authority website. Lloyds Bank plc is a member of the Financial Services Compensation Scheme and the Financial Ombudsman Service. We subscribe to the Lending Code; copies of the Code can be obtained from www.lendingstandardsboard.org.ukVisit the Lending Standards Board website.

Lloyds Bank plc Registered Office: 25 Gresham Street, London EC2V 7HN. Registered in England and Wales No. 2065.

Save the Change® is a registered trademark of Lloyds Bank plc.