Low income individuals who have taxable savings income, such as bank or building society interest, currently pay income tax at 10% on such income up to the starting rate limit of £2,790.
The 10% rate only applies if the £2,790 limit has not been used against other taxable non-savings income such as pensions.
Dividend income does not impact the availability of the starting rate.
From 6 April 2015 the starting rate limit will be increased to £5,000, and the starting rate of tax will be reduced from 10% to 0%.
These provisions will ensure that savers on low incomes will not suffer income tax on their savings income.