Updated: Reference to notify HMRC of your share of the interest via form BBSI5 removed because it is no longer relevant.
From April 2016 HM Revenue and Customs introduced a tax-free Personal Savings Allowance of £1,000 (£500 for higher rate taxpayers) for savings income or interest.
The new allowance means that most people will no longer pay tax on their savings interest.
Source: HMRC