The Personal Savings Allowance allows many people to earn interest on their savings without paying Income Tax. The amount you can receive tax-free depends on your Income Tax band.
For the 2026/27 tax year, the allowance is:
- Basic Rate taxpayers: Up to £1,000 of tax-free savings interest.
- Higher Rate taxpayers: Up to £500 of tax-free savings interest.
- Additional Rate taxpayers: No Personal Savings Allowance is available.
The allowance applies to interest earned from most savings accounts, as well as certain other forms of interest income, including bond chargeable event gains.
If your savings interest exceeds your Personal Savings Allowance, any additional interest will normally be taxed at your marginal rate of Income Tax.
Understanding how the allowance works can help you make the most of your savings and avoid unexpected tax liabilities. If you’re unsure how your savings income is taxed or would like advice on tax-efficient financial planning, we’re always happy to help.
