Reform of the savings system – and in particular how deposits are taxed – was one of the most eye-catching parts of George Osborne’s Budget this week.
So what do these changes mean?
Read our guide to the winners and losers of this year's Budget.
No tax on the first £1,000 of interest
From April 2016, most people will get an annual tax-free savings interest allowance of £1,000.
This means that only when you earn more than £1,000 in interest in a given financial year, will you start to pay income tax on it.
If you are a higher-rate taxpayer, your annual allowance will be just £500 however.
The government had already announced that, from next month, there is no tax to pay on interest if your annual taxable income is less than £15,600.
Read our guide to tax after retirement.
No automatic tax deductions
At the moment, banks and building societies automatically deduct basic-rate tax at 20% from any interest payments they make.
If you are a non-taxpayer, you have to tell them not to make these deductions.
However, with the introduction of the new savings allowance next year, these automatic deductions will cease.
More flexible ISAs
From this autumn, savers will have more freedom to take money out of an ISA (individual savings account) and re-deposit it without fear of losing tax benefits.
At present, any money taken out of an ISA cannot be re-deposited without it affecting the £15,000 annual limit (this rises to £15,240 next month).
Under the current system, for example, if you had already saved £15,000 into an ISA, you could not take some money out and then top up your ISA again later in the same tax year.
These new changes however mean that this would be possible.
Read more about the different types of ISA.
Help To Buy ISA
The government’s Help To Buy scheme was set up two years ago to help people take their first steps on the property ladder by providing financial assistance with their mortgage.
The new Help To Buy ISA means the government will supplement the savings of potential first-time buyers to help them put together a deposit.
The scheme is generous: it pays up to an extra £50 a month on savings of £200, with a total limit of £3,000.
So if someone saved up £12,000, the government would top this up to £15,000, which represents a 10% deposit on an averagely priced first home.
The scheme is available for purchases worth up to £450,000 in London and up to £250,000 in other parts of the country.
Read our round-up of the Budget here.
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