Answers · UK 2025/26
How much savings interest is tax-free on a £50,000 salary in 2026/27?
On a £50,000 salary for 2026/27 you are still a basic-rate taxpayer, since the higher-rate threshold is £50,270, so your Personal Savings Allowance is the full £1,000. Interest above that is taxed at 20%.
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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 get nothing. On a £50,000 salary you remain a basic-rate taxpayer, because the higher-rate threshold sits at £50,270 gross income, £270 above this salary, so you still qualify for the full £1,000 PSA rather than the reduced £500 higher-rate allowance. That means the first £1,000 of interest from savings accounts, current accounts and many bonds is tax-free, and interest above £1,000 is taxed at 20%. With savings rates around 4% to 5%, roughly £20,000 to £25,000 in ordinary savings would use up the full £1,000 allowance. Because you are so close to the higher-rate threshold, savings interest itself counts towards your total income for some purposes, so a large amount of taxable interest on top of a £50,000 salary could in principle push your total income over £50,270 and reduce your PSA to £500 for that portion -- in practice HMRC applies the PSA based on your overall marginal rate once all income, including interest, is combined. Interest inside a cash ISA or stocks and shares ISA is always completely tax-free and does not use any of your PSA. Use the Savings Interest calculator to work out how much of your interest is taxable.
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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.