Your tax questions answered here

I filed my tax return recently and I had a tax bill as a result of my savings income. Is there anything I can do to reduce my tax bill next year? Mrs A, Hastings

Answer:

Using an Individual Savings Account (ISA) is a method of reducing your tax liability as any interest earnt is tax free, resulting in you keeping the interest that you receive.

Accordingly, any income earnt in this account would not be included on your tax return, thus reducing your level of savings income. From April 2016, the government introduced a new savings allowance which allows basic rate taxpayers to earn up to £1,000 savings income tax-free, which is in addition to your interest earnt from ISAs.