Answers · UK 2025/26
How much savings interest is tax free in the UK?
Most UK savers can earn £1,000 of savings interest tax-free under the Personal Savings Allowance (basic rate). Higher rate taxpayers get £500. Additional rate taxpayers get £0. ISAs are tax-free on top, and a £5,000 starting rate band may also apply at low incomes.
Full answer
The Personal Savings Allowance (PSA) for 2025/26 lets basic-rate taxpayers earn £1,000 in savings interest tax-free, higher-rate taxpayers £500, and additional-rate taxpayers £0. This is in addition to your Personal Allowance and any savings starting rate. If your non-savings income is below the Personal Allowance, you can also get up to £5,000 of savings income at the 0% starting rate (reducing £1-for-£1 for each £1 of non-savings income above the Personal Allowance). Interest from Cash ISAs, Lifetime ISAs and Premium Bond winnings is always tax-free and does not count against PSA. Banks no longer deduct tax at source — interest is paid gross and you declare any tax owed via Self Assessment or your tax code. NS&I savings (Premium Bonds, Income Bonds) — winnings tax-free, but Income Bonds interest counts towards PSA. With rates back at 4–5% in 2025, even modest savers can exceed PSA quickly: £25,000 at 4% generates £1,000 — exactly the basic-rate PSA limit.
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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.