{"id":370031,"date":"2021-03-03T16:17:15","date_gmt":"2021-03-03T16:17:15","guid":{"rendered":"https:\/\/www.finder.com\/uk\/?p=370031"},"modified":"2025-12-09T12:00:16","modified_gmt":"2025-12-09T12:00:16","slug":"tax-savings-account","status":"publish","type":"post","link":"https:\/\/www.finder.com\/uk\/savings-accounts\/tax-savings-account","title":{"rendered":"Paying tax on interest from a savings account"},"content":{"rendered":"

If you need to file a self-assessment tax return at the end of each financial year, you must declare all your sources of income, including any income earned from savings and investments. This means if you have money in a savings account<\/a> that has earned interest in the previous financial year, you\u2019ll need to declare this amount and pay tax on savings interest \u2013 unless it\u2019s in an ISA<\/a>, where you don\u2019t pay tax on any interest you earn.<\/p>

At what rate is the interest taxed?<\/h3>

The amount of tax that applies to the interest you earn on your savings account will be determined by your overall taxable income. The total income you earn each year determines the tax rate you must pay, and HM Revenue & Customs\u2019 (HMRC\u2019s) tax rates for the 2025-2026 financial year, which you can see below.<\/p>

England and Wales<\/h4>
Band<\/th>Taxable income<\/th>Tax rate<\/th><\/tr><\/thead>
Personal Allowance<\/th>Up to \u00a312,570<\/td>0%<\/td><\/tr>
Basic rate<\/th>\u00a312,571 to \u00a350,270<\/td>20%<\/td><\/tr>
Higher rate<\/th>\u00a350,271 to \u00a3125,140<\/td>40%<\/td><\/tr>
Additional rate<\/th>over \u00a3125,140<\/td>45%<\/td><\/tr><\/tbody><\/table>

Scotland<\/h4>
Band<\/th>Taxable income<\/th>Scottish tax rate<\/th><\/tr><\/thead>
Personal Allowance<\/th>Up to \u00a312,570<\/td>0%<\/td><\/tr>
Starter rate<\/th>\u00a312,571 to \u00a315,397<\/td>19%<\/td><\/tr>
Basic rate<\/th>\u00a315,398 to \u00a327,491<\/td>20%<\/td><\/tr>
Intermediate rate<\/th>\u00a327,492 to \u00a343,662<\/td>21%<\/td><\/tr>
Higher rate<\/th>\u00a343,663 to \u00a375,000<\/td>42%<\/td><\/tr>
Advanced rate<\/th>\u00a375,001 to \u00a3125,140<\/td>45%<\/td><\/tr>
Top rate<\/th>over \u00a3125,140<\/td>48%<\/td><\/tr><\/tbody><\/table>

How much money can you have in your savings account without being taxed?<\/h3>

The table below illustrates how much you can earn before paying tax on your savings interest.<\/p>
Tax rate<\/th>Annual income (not from savings)<\/th>Tax-free interest on savings<\/th><\/tr><\/thead>
No tax<\/th>\u00a30 to \u00a312,570<\/td>Earn up to \u00a35,000 tax-free through the starting rate for savings<\/td><\/tr>
Basic rate taxpayer, low income<\/th>\u00a312,571 to \u00a317,570<\/td>Earn up to \u00a35,000 tax-free through the starting rate for savings, as well as up to \u00a31,000 tax-free with the personal savings allowance (PSA)<\/td><\/tr>
Basic rate taxpayer<\/th>\u00a317,571 to \u00a350,270<\/td>Earn up to \u00a31,000 in savings interest tax-free through the PSA<\/td><\/tr>
Higher rate taxpayer<\/th>\u00a350,271 to \u00a3125,140<\/td>Earn up to \u00a3500 in savings interest tax-free through the PSA<\/td><\/tr>
Additional rate taxpayer<\/th>Over \u00a3125,140<\/td>No savings interest allowance<\/td><\/tr><\/tbody><\/table>
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