changes to the way interest on savings is paid

your interest will be paid gross from 6 April 2016

Up to and including 5 April 2016 banks and building societies automatically take 20% income tax from the interest you receive on non-ISA savings and current accounts, unless you're registered for gross interest.

From 6 April 2016 banks and building societies will start paying interest to you 'gross'. This means we'll stop taking 20% in income tax from the interest you receive on non-ISA savings and current accounts.

This will happen automatically and you don't need to contact us or do anything. In the past, to register for gross interest you would have needed to complete our gross registration process but, from 6 April 2016, there's no need to do this.

why?

In the 2015 budget, the government announced that from 6 April 2016 a new tax-free Personal Savings Allowance would be introduced.

The new Personal Savings Allowance means most people will no longer need to pay tax on their interest.

how do I know if I need to pay tax?

If you owe tax on the interest that you receive after 6 April 2016 you'll settle this directly with Her Majesty's Revenue & Customs (HMRC).

For further information on the Personal Savings Allowance and whether you need to pay tax on the interest that you receive take a look at the HMRC website and search for 'Personal Savings Allowance'.

if you need to complete a self assessment tax return

Your new Account Summary provides all of the interest information you need to complete self-assessment for your cahoot personal savings and current accounts, in one place. It will automatically be available in online banking from May for the previous tax year. To find your Account Summary:

You can also get paper copies by telephoning us on 0800 587 1111. We're open 8am to 8pm Monday to Friday, and 9am to 5pm on Saturday.

we'll change your terms and conditions to reflect this

On 6 April 2016, your 'cahoot general and product specific terms and conditions' will be changed to reflect that interest on savings and current account is paid without deduction of income tax and that there is no longer a requirement for you to register to receive gross interest.

How the 'cahoot general and product specific terms and conditions' will change is set out below:

cahoot general and product specific conditions - section old term new Term
23.Taxation 23.1 We will pay you credit interest net of income tax unless you have provided us with a completed Inland Revenue self-certification (R85), in which case we will pay gross credit interest to you. Where you are a higher rate tax payer, you may be liable to pay additional tax on any interest we pay to you. It is your responsibility to ensure that this tax is paid. 23.1 Interest payments made on or before 5 April 2016 will be paid net of income tax, unless you've registered to receive interest gross. Where you are a higher rate or additional rate tax payer, you may be liable to pay additional tax on any interest we pay to you.

Interest payments made on or after 6 April 2016 will be paid using the gross rate. This means all the interest we pay you will be without tax deducted. If the total amount of interest you receive exceeds any Personal Savings Allowance to which you're entitled, you may have to pay tax at the applicable rate. This would need to be paid directly to HM Revenue & Customs ('HMRC'). For more information, please visit gov.uk and search for 'Personal Savings Allowance'.

Other taxes or costs may exist that are not paid via us or imposed by us. It's your responsibility to ensure that this tax is paid.
1.3 Meaning of words in the agreement New gross interest means the interest we pay when no income tax has been deducted.
  New net interest means the interest we pay after deduction of income tax at the rate specified by law.

Your updated 'cahoot general and product specific terms and conditions' can be viewed here

what you need to do

If you feel your account is still right for you, you don't need to do anything and we'll assume you accept these changes unless we hear from you before the changes come into effect on 6 April 2016.

You can continue to use your account as you do today but, if you feel your account is no longer right for you or you don't accept these changes, please call us on 0800 587 1111 (Monday to Friday 8am to 8pm, and Saturday 9am to 5pm). You can choose to close your account immediately without loss of interest or any additional charges before these changes come into effect.

cahoot is a division of Santander UK plc. Registered Office: 2 Triton Square, Regentís Place, London NW1 3AN, United Kingdom. Registered Number 2294747. Registered in England and Wales. www.santander.co.uk. Telephone 0800 389 7000. Calls may be recorded or monitored. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Our Financial Services Register number is 106054. You can check this on the Financial Services Register by visiting the FCA's website www.fca.org.uk/register or by contacting the FCA on 0800 111 6768. cahoot, Santander and the flame logo are registered trademarks.