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:21 Jan 2025
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.
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