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  • Personal Savings Allowance explained

    We explain your Personal Savings Allowance. Plus, when and how to pay tax on your savings.

    Important information

    This article gives you information to help you make the most of your money, but it isn’t personal advice. If you’re not sure if a certain action is right for you, please ask for advice.

    Last Updated: 6 April 2024

    Important information - Information is correct as at 6 April 2024 and is based on the rates and allowances for individual investors which apply to the 2024/25 tax year. The Personal Savings Allowance is calculated using rest of the UK, not Scottish, income tax bands. Tax rules can change, and benefits depend on your circumstances. The tax year runs from 6 April to 5 April.

    Should you require specialist tax advice please ask for assistance from an accountant. We provide you with information to help you make informed decisions, but not personal advice. Fixed term products generally only allow access to your cash at maturity. Inflation reduces the future spending power of money.

    What is the Personal Savings Allowance?

    The Personal Savings Allowance (PSA) lets you earn a certain amount of interest tax-free.

    Your allowance depends on what rate of income tax you pay.

    The below figures assume a standard Personal Savings Allowance for the 2024/25 tax year:

    Tax band Taxable income (excluding savings) Personal Savings Allowance
    Non taxpayer £0 to £12,570 £1,000
    Basic rate taxpayer £12,570 to £50,270 £1,000
    Higher rate taxpayer £50,270 to £125,140 £500
    Additional rate taxpayer Over £125,140 No personal savings allowance

    If you’re married or in a civil partnership you could split your savings with your spouse to effectively have a combined PSA of up to £2,000.

    The personal savings allowance is calculated using rest of the UK, not Scottish, income tax bands. Tax rules can change, and benefits depend on personal circumstances.

    What is the “starting rate” for savings?

    You may be eligible for the starting rate for savings if your non-savings income is less than £17,570 per year. The starting savings rate allows you to earn up to £5,000 in savings interest completely tax-free. This is in addition to your personal income tax allowance and personal savings allowance.

    Every £1 of other income you earn above your personal allowance (£12,570 for most people) reduces your savings starting rate by £1.

    Does the Personal Savings Allowance apply to Cash ISAs?

    Unlike other savings accounts, all interest earned in a Cash ISA is free from UK income tax without using any of your PSA or starting rate for savings.

    The amount you can put into a Cash ISA is limited by the ISA allowance, which is £20,000 this tax year. The ISA allowance does not replace the Personal Savings Allowance.

    You're free to split your ISA allowance any way you like across Cash ISAs, Stocks and Shares ISAs, and Innovative Finance ISAs, as long as you stay within the overall limit. You are not able to pay into more than one Lifetime ISA per tax year, and you can subscribe a maximum of £4,000.


    What happens if I exceed my Personal Savings Allowance?

    If interest you earn on cash savings exceeds your personal savings allowance, and you’re employed or get a pension, HMRC will collect any tax you owe through pay-as-you-earn (PAYE). This is done automatically.

    If you complete a tax return, you need to report interest earned on savings as part of that.

    As part of your April quarterly statement, HL will send you a consolidated tax certificate for all the products you hold with HL. This summarises all the interest you received through your HL products which is subject to UK tax. You are responsible for submitting this to HMRC with your tax return.

    If you’re neither employed nor complete a tax return, and don’t have a pension income, HMRC will look into the interest you have earned and let you know if you need to pay any tax and how to pay it.

    Interest earned from investments which you may need to pay tax on should be reported through a tax return.

    When do you pay tax on your savings?

    Interest will only normally be taxable at the point you’re able to access it.

    So if you have a fixed rate product, the interest would be taxable when it reaches maturity and you can withdraw your earnings.

    An easier way to manage your savings tax

    Active Savings gives you access to consistently competitive rates from our many banking partners, all in one account.

    You can manage your cash in a few clicks, and download a single consolidated tax certificate for all your HL investments and savings.


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      Hargreaves Lansdown PLC group companies will usually send you further information by post and/or email about our products and services. If you would prefer not to receive this, please do let us know. We will not sell or trade your personal data.

      This website is issued by Hargreaves Lansdown Asset Management Limited (company number 1896481), which is authorised and regulated by the Financial Conduct Authority with firm reference 115248.

      The Active Savings service is provided by Hargreaves Lansdown Savings Limited (company number 8355960). Hargreaves Lansdown Savings Limited is authorised and regulated by the Financial Conduct Authority (firm reference number 915119). Hargreaves Lansdown Savings Limited is authorised by the Financial Conduct Authority under the Electronic Money Regulations 2011 with firm reference 901007 for the issuing of electronic money. Hargreaves Lansdown Asset Management Limited and Hargreaves Lansdown Savings Limited are subsidiaries of Hargreaves Lansdown plc (company number 212214).

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