Answers · UK 2025/26
How much savings interest is tax-free on a £60,000 salary in 2026/27?
On a £60,000 salary for 2026/27 you are a higher-rate taxpayer, so your Personal Savings Allowance is £500, not £1,000. You can earn £500 of savings interest tax-free; interest above that is taxed at 40%. Interest inside an ISA is always tax-free and does not count towards the allowance.
Full answer
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 £60,000 salary you are a higher-rate taxpayer, since the higher-rate threshold is £50,270, so your PSA is £500. That means the first £500 of interest from savings accounts, current accounts and many bonds is tax-free, and interest above £500 is taxed at your 40% higher rate. With savings rates around 4 to 5%, you would need roughly £10,000 to £12,500 in ordinary savings before exceeding the £500 allowance. The starting rate for savings does not help here because your salary far exceeds the £17,570 limit. Interest earned inside a cash ISA or stocks and shares ISA is always tax-free and does not use any of your PSA, so moving savings into your £20,000 annual ISA allowance shelters interest once you approach the £500 limit. HMRC normally collects tax due on interest above your allowance by adjusting your tax code, using figures banks report automatically. If a pay rise or bonus pushes your adjusted net income towards £100,000, watch the Personal Allowance taper, which can sharply increase your effective tax rate. Use the Savings Interest calculator to work out how much of your interest is taxable at the higher rate.
Try the calculator
More answers
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.