ordinary families will not have to pay a single penny of tax on their savings, george osborne announced today the chancellor said he was abolishing all tax on the first £1,000 of interest savers earn from their nest eggs the move will benefit 17 million who have put aside up to around £35,000 until now, people earning less than £42,700 have had to pay 20 per cent tax on the interest they get from their savings   while those on up to £150,000 have been taxed at 40 per cent today's announcement means 95 per cent of savers will no longer pay any tax on their savings mr osborne said savers have paid tax already on the money when they earned it – they shouldn't have to pay it again he said it meant 'tax free banking for almost the entire population’ scroll down for video  the chancellor said he was abolishing all tax on the first £1,000 of interest savers earn from their nest eggs the move will benefit 17 million who have put aside up to around £35,000  he told mps: ‘with our new personal savings allowance, 17 million people will see the tax on their savings not just cut, but abolished ‘an entire system of tax collection can be scrapped at a stroke we create tax free banking for almost the entire population’ it is the latest in a series of measures designed to woo pensioners, who are more likely to vote and save mr osborne also confirmed plans to let five million oaps cash in their retirement deals to help people stuck on rip off annuity rates mr osborne's policy will give those who have already taken out an annuity the right to cash it in for a lump sum from april next year he told mps: 'we will give five million pensioners access to their annuity for many an annuity is the right product, but for some it makes sense to access their annuity now 'so we’re changing the law to make that possible from next year the punitive tax charge of at least 55% will be abolished tax will be applied only at the marginal rate 'and we’ll consult to ensure pensioners get the right guidance and advice so freedom for five million people with an annuity’ until now, people earning less than £42,700 have had to pay 20 per cent tax on the interest they get from their savings   while those on up to £150,000 have been taxed at 40 per cent  today’s announcements offer welcome relief to millions of savers who have suffered dismal rates on isas, savings accounts and annuities since the bank of england base rate was slashed to 05 per cent just over six years ago families have lost as much as £5,000 since rates were cut, according to a recent estimates the average rate paid on instant access bank accounts has fallen from 31 per cent in september 2008 to just 078 per cent now average isa rates have also fallen from 199 per cent in march 2009 to 145 per cent savers will also benefit from a 'radically more flexible isa', which will allow savers to take money out of their isa and put it back later on in the year without losing any of their tax free entitlement mr osborne said: ‘we will introduce a radically more flexible isa in two weeks’ time the changes i’ve already made mean people will be able to put £15,240 into an isa 'but if you take that money out – you lose your tax free entitlement, and so can’t put it back in 'this restricts what people can do with their own savings – but i believe people should be trusted with their hard earned money 'with the fully flexible isa people will have complete freedom to take money out, and put it back in later in the year, without losing any of their tax free entitlement  'it will be available from this autumn and we will also expand the range of investments that are eligible'
1,000 95% up to around £35,000 osborne
no tax on the first £1,000 of interest savers earn from their nest eggs . announcement means 95% of savers will no longer pay any tax on savings . the move will benefit 17 million who have put aside up to around £35,000 . osborne said  it meant 'tax free banking for almost the entire population’