Answers · UK 2025/26
What is the starting rate for savings interest and who qualifies for it?
The starting rate for savings is a 0% tax band on up to £5,000 of savings interest per year. You qualify if your non-savings income (salary, pension, rental income) is below £17,570. For every £1 of non-savings income above the £12,570 Personal Allowance, your £5,000 starting rate band shrinks by £1.
Full answer
The starting rate for savings is an additional 0% tax band specifically for savings interest. It works alongside the Personal Allowance and the Personal Savings Allowance and can mean some people pay no tax at all on their savings interest. **How the starting rate band works** The starting rate band is £5,000 at 0%. However it is only available on income that falls within the first £17,570 of total income (£12,570 Personal Allowance + £5,000 starting rate band). For each £1 of non-savings income (wages, self-employment, pension) above your Personal Allowance (£12,570), the £5,000 starting rate band shrinks by £1. **Who qualifies -- key threshold: £17,570** - Non-savings income below £12,570: full £5,000 starting rate available - Non-savings income between £12,570--£17,570: partial starting rate available - Non-savings income above £17,570: no starting rate for savings **Worked example 1 -- retired person on small pension** Margaret, 70, has a pension income of £10,000/year and £3,000 savings interest. - Non-savings income: £10,000 (below PA of £12,570) - Starting rate band remaining: £5,000 (fully intact because pension is below PA) - Savings interest of £3,000: covered by starting rate at 0% - Tax on savings: £0 **Worked example 2 -- salary of £14,000** John earns £14,000 salary and has £2,000 savings interest. - Non-savings income above PA: £14,000 - £12,570 = £1,430 - Starting rate band remaining: £5,000 - £1,430 = £3,570 - Savings interest of £2,000: covered by the £3,570 remaining starting rate - Tax on savings: £0 **Worked example 3 -- salary of £18,000** Sarah earns £18,000 salary: - Non-savings income above PA: £18,000 - £12,570 = £5,430 (exceeds £5,000) - Starting rate band: fully used up -- no starting rate relief available - She can still use the £1,000 Personal Savings Allowance **Stacking allowances** At very low incomes you can combine: Personal Allowance (£12,570) + Starting Rate for Savings (£5,000) + Personal Savings Allowance (£1,000) = up to £18,570 tax-free income (mix of earnings and savings 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.