Answers · UK 2025/26
How much savings interest is tax-free on a £100,000 salary in 2026/27?
On a £100,000 salary for 2026/27 you are a higher-rate taxpayer, so your Personal Savings Allowance is £500. You can earn £500 of savings interest tax-free; interest above that is taxed at 40%. At this income, savings interest can also affect the Personal Allowance taper.
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The Personal Savings Allowance (PSA) depends on your tax band. For 2026/27 basic-rate taxpayers get £1,000 of tax-free savings interest, higher-rate taxpayers get £500, and additional-rate taxpayers (above £125,140) get nothing. On a £100,000 salary you are a higher-rate taxpayer, since the higher-rate threshold is £50,270, so your PSA is £500, and the first £500 of interest from savings accounts and bonds is tax-free, with anything above taxed at 40%. Crucially, £100,000 is also the point where the Personal Allowance starts to taper -- reduced by £1 for every £2 of adjusted net income above £100,000 -- and savings interest counts towards this adjusted net income. This means any taxable savings interest above the £500 PSA at this salary level effectively erodes your Personal Allowance as well as being taxed at 40%, creating a marginal effective rate that can exceed 40% once the taper interacts with the interest. For example, someone with exactly £100,000 salary and £2,000 of interest has £1,500 taxable interest, which both attracts 40% Income Tax and reduces the Personal Allowance by £750 (half of the £1,500), pulling more of the salary itself into tax. Moving savings into an ISA shelters interest from this effect entirely, since ISA interest does not count towards adjusted net income. Use the Savings Interest calculator and Income Tax calculator together to model the combined impact.
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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.