Glossary · UK
What is Starting Rate for Savings?
A 0% tax band of up to £5,000 for savings interest, which shrinks pound-for-pound as your other (non-savings) income rises above the Personal Allowance.
Full Definition
The starting rate for savings is a 0% tax band, worth up to £5,000, that applies to interest income (from savings accounts, some bonds, and similar sources) for people whose other income — wages, pension, self-employment profit — is low. The band is reduced pound for pound by non-savings income above the Personal Allowance, so it only has real value for people with total non-savings income below roughly £17,570 (Personal Allowance plus the full £5,000 band); anyone with non-savings income of £17,570 or more gets no starting rate for savings band at all, though they may still benefit separately from the Personal Savings Allowance (£1,000 for basic-rate taxpayers, £500 for higher-rate). The starting rate for savings mainly benefits retirees and part-time workers with modest earned income but meaningful savings interest, letting a significant amount of interest be received completely tax-free once the Personal Allowance, starting rate band and Personal Savings Allowance are combined.
How Starting Rate for Savings is calculated
Starting rate for savings band = 5000 GBP, reduced GBP for GBP by non-savings income above the Personal Allowance- 5000
- Maximum starting rate for savings band (GBP), taxed at 0%, for 2026/27.
- 12570
- Personal Allowance (GBP), which uses up the starting rate band first if non-savings income exceeds it.
Worked example: Someone with GBP 14,000 of non-savings income (wages) has used GBP 1,430 of the GBP 5,000 starting-rate band already (14,000 - 12,570), leaving GBP 3,570 of savings interest taxable at 0% before the Personal Savings Allowance and basic-rate tax apply.