Personal Savings Allowance

A Personal Savings Allowance is the maximum tax-free savings income you can earn on your savings each tax year.

This basically means how much interest you can earn tax-free – and we can all agree that while saving feels good, doing it tax-free feels even better.

Your Personal Savings Allowance doesn’t include accounts where interest isn't taxed, like our Cash ISA.

Savings income is any amount of money you earn from your savings and includes:

• interest from banks and building societies
• interest from other account providers, such as credit unions
• interest distributions (but not dividend distributions) from authorised unit trusts, open-ended investment companies and investment trusts
• interest from government or company bonds
• interest from life annuity payments
• interest from life insurance contracts.

Your Personal Savings Allowance depends on what rate of income tax you pay. Here’s the Personal Savings Allowance for tax year 2025-26:

• Basic rate (20%) taxpayers - Earn up to £1,000 tax-free
• Higher rate (40%) taxpayers - Earn up to £500 tax-free
• Additional rate (45%) taxpayers - No Personal Savings Allowance

No, that’s the beauty of Individual Savings Accounts (ISAs). You can save tax-free each year and any interest you earn doesn’t count towards your Personal Savings Allowance.

Currently, you can save up to £20,000 tax-free in an ISA – plus you’ll still have your Personal Savings Allowance to use on your other savings accounts.

If you earn more savings income than your allowance, HMRC (HM Revenue & Customs) will collect any tax you owe via:

• a change to your tax code (based on information from banks, building societies etc)
• or via your self-assessment tax return, if you complete one.

If you think you’ve paid too much tax on your savings income, you may be able to claim it back from HMRC (HM Revenue & Customs) for up to 4 years.

To do this, you’ll need to fill in an R40 form (R43 if you live outside the UK). You can find the forms at gov.uk Opens an overlay [Will show a security message first].

Nope, you don't need to tell us anything about your tax rate or other savings income.

We just take care of the money in your first direct account(s).

If you’re already saving and your savings income is less than your Personal Savings Allowance, then you won’t pay any tax on it. And the good news is that you’ve got room to save even more tax-free, if you can afford to. 

If your savings income is more than your Personal Savings Allowance then it might be worth getting an ISA, if you haven’t got one already.  If you’re currently not saving we have lots of savings accounts you could choose from.

Our savings comparison page can help you pick an account that’s right for you.