What is the Personal Savings Allowance?

For people with savings who want to know how much interest they can earn tax free.

Applies to: England, Scotland, Wales, Northern Ireland Last checked against official sources: 6 October 2026

The Personal Savings Allowance lets you earn some savings interest each tax year without paying tax on it.

Basic rate taxpayers can earn up to £1,000 of interest tax free.
Higher rate taxpayers can earn up to £500.
Additional rate taxpayers get no allowance.
If your other income is under £17,570, you may also get up to £5,000 of interest tax free through the starting rate for savings.
Interest from ISAs does not count.

Key facts

Basic rate: £1,000 tax free
Higher rate: £500
Additional rate: £0
Starting rate: up to £5,000

Personal Savings Allowance, 2026/27

The amount you get depends on your Income Tax band. The allowance resets every tax year, on 6 April. These figures apply to 2026/27 (6 April 2026 to 5 April 2027).

Income Tax band	Tax-free interest a year
Basic rate	£1,000
Higher rate	£500
Additional rate	£0

The starting rate for savings

You may get up to £5,000 of interest tax free on top of this. This is the starting rate for savings. You get it if your other taxable income (such as wages or pension) is less than £17,570.

Every £1 of other income above your Personal Allowance (£12,570) cuts the £5,000 by £1.

Worked example: low earner

You earn £16,000 in wages and get £200 in savings interest.

Wages above the Personal Allowance: £16,000 minus £12,570 = £3,430
Starting rate left: £5,000 minus £3,430 = £1,570

Your £200 of interest is covered by the starting rate. You also still have your £1,000 Personal Savings Allowance. You pay no tax on the interest.

Worked example: basic rate taxpayer

You are a basic rate taxpayer and earn £1,300 in interest.

First £1,000: tax free
Remaining £300: taxed at 20%, which is £60

Worked example: higher rate taxpayer

You pay higher rate tax and earn £800 in interest.

First £500: tax free
Remaining £300: taxed at 40%, which is £120

What counts as savings interest

Interest from these can be taxed:

bank and building society accounts
savings and credit union accounts

You do not usually pay tax on interest from Individual Savings Accounts (ISAs) or some National Savings and Investments products.

HMRC adds up interest from all your accounts. For joint accounts, it splits the interest equally between you, unless you tell it the account is split differently.

How the tax is collected

You do not need to do anything in most cases. Banks and building societies tell HMRC how much interest you earned after 5 April each year. If you owe tax, HMRC will let you know by post or through your Personal Tax Account. People who fill in a Self Assessment tax return include their interest there.

Related guides

Where these figures come from

Get it done

This takes you to the official service, which is free to use.

Check your tax-free savings interest

Common questions

How much interest can I earn tax free?

Up to £1,000 a year if you are a basic rate taxpayer, or £500 if you pay higher rate tax. You may get more through the starting rate for savings if your other income is low.

How do I pay tax on savings interest?

Banks and building societies tell HMRC how much interest you earned. If you owe tax, HMRC will tell you by post or in your Personal Tax Account.

Does ISA interest count?

No. You do not usually pay tax on interest from ISAs.

Official sources

1.Tax on savings interest: how much is tax free (GOV.UK)www.gov.uk/apply-tax-free-interest-on-savings/how-much-is-tax-free
2.Tax on savings interest (GOV.UK)www.gov.uk/apply-tax-free-interest-on-savings

Checked against GOV.UK on 6 October 2026

Ask about your situation

Please don't include your name, address, National Insurance number or health details. See our privacy notice.