LONG suffering savers finally have something to cheer about with a £1,000 tax-free allowance announced in the Budget.
Chancellor George Osborne said the new personal savings allowance would take 95 per cent of taxpayers out of savings tax altogether and benefit 17 million people.
It means that from April next year, a tax-free allowance of £1,000, or £500 for higher rate taxpayers, will be introduced for the interest that people earn on their savings.
For someone who earns £20,000 a year and receives £1,500 in interest, won't need to pay any tax on the interest up to £1,000, but they will need to pay tax on the £500 interest earned above their personal savings allowance.
Mr Osborne also announced greater flexibility for Isas which would allow people to put money in and out of their account in the same year and not lose their Isa tax benefits.
A new Help to Buy Isa is also to be introduced this autumn aimed at helping first time buyers onto the property ladder.
It is anticipated that 285,000 people will use the scheme every year.
They will be able to save up to £200 a month, which will be boosted by £50 from the government.
People can make an initial deposit of £1,000 when they open the account, in addition to their normal monthly savings while the maximum bonus size is £3,000 per person and the bonus will be paid when the saver buys their first home.
Mr Osborne hailed the measures as "major new steps in our savings revolution".