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Paying tax on your savings - your Personal Savings Allowance

Learn about the Personal Savings Allowance and when you will and won’t pay tax on interest earned from your savings.

Published:19 February 2026

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Savings guides

What is the Personal Savings Allowance?

On 6 April 2016, the Government introduced the Personal Savings Allowance. This allows you to earn interest on your savings (excluding ISAs which are always tax free) and current account balance tax free, up to a certain amount depending on what rate of income tax you pay:

How much interest can I earn on my savings without paying tax?

  • Basic-rate (20%) taxpayers: can earn £1,000 in savings interest per year with no tax
  • Higher-rate (40%) taxpayers: can earn £500 in savings interest per year with no tax
  • Additional-rate (45%) taxpayers: £0 – they do not get an allowance.
  • If you're a non-taxpayer: that is you have less than £12,570 income per year, you may be able to earn as much as £18,570 in savings interest tax-free.

The interest you earn from an ISA doesn’t contribute to your Personal Savings Allowance so you won’t pay any tax on the interest you earn from your ISAs.

The current tax rules are subject to change by HM Revenue & Customs and the value of tax benefits depends on individual circumstances.

For more details on what your Personal Savings Allowance will be in the current tax year, please visit the HMRC website.

Do I pay tax on the interest earned from my ISA?

No.

The interest you earn form an ISA is not taxable, so it doesn’t contribute to your Personal Savings Allowance. This means you don’t need to tell HMRC about the interest earned from any ISAs you have.

You can learn more about ISAs in our ISAs explained guide.

How ISAs work

Learn about the different types of ISAs and how they work

What counts towards your Personal Savings Allowance?

Most types of interest you earn on money in a bank or building society counts towards your Personal Savings Allowance. This includes interest from:

  • Easy access​ savings accountsEasy access​ savings accounts
  • Fixed rate savings accounts​Fixed rate savings accounts​
  • Regular saver​ accountsRegular saver​ accounts

It can also include interest from current account balances, notice accounts, credit unions.

In most cases, your bank or provider will automatically tell HMRC how much interest you earned.

What happens if I go over the UK Personal Savings Allowance?

If your savings interest is higher than your Personal Savings Allowance:​

  • You’ll need to pay tax on the extra amountYou’ll need to pay tax on the extra amount
  • HMRC will usually collect this tax automatically through your tax code, if you are employed or receive a pensionHMRC will usually collect this tax automatically through your tax code, if you are employed or receive a pension
  • If you complete a Self Assessment tax return, you will need to include the interest thereIf you complete a Self Assessment tax return, you will need to include the interest there

You won’t normally need to contact your bank, as they report interest to HMRC for you.

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