Answers · UK 2025/26
How much savings interest is tax free in 2026?
Basic-rate taxpayers get a £1,000 Personal Savings Allowance for 2026/27, higher-rate taxpayers get £500, and additional-rate taxpayers get nothing. Interest within an ISA is always tax-free and does not count towards this allowance.
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The Personal Savings Allowance lets most people earn interest tax-free for 2026/27. Basic-rate (20%) taxpayers can earn £1,000 of savings interest tax-free; higher-rate (40%) taxpayers get £500; additional-rate (45%) taxpayers get no allowance. Separately, the starting rate for savings gives up to £5,000 of tax-free interest to those with low non-savings income, tapering away as other income rises above the Personal Allowance. Worked example: a basic-rate taxpayer with £30,000 in an easy-access account at 4% earns £1,200 interest; the first £1,000 is tax-free under the PSA, and the remaining £200 is taxed at 20% = £40. A higher-rate taxpayer earning the same £1,200 would have £500 tax-free and pay 40% on £700 = £280. Interest held inside a Cash ISA is entirely tax-free and does not use up the PSA, which makes ISAs increasingly valuable as rates rise. The allowances are set UK-wide, but in Scotland your taxpayer status is determined by Scottish Income Tax bands, which can affect whether you get £1,000 or £500. Use the Savings and ISA calculators to work out your tax-free interest.
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This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.