How are my savings taxed?
The savings accounts you choose can affect the amount you’ll be taxed.

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: 15 September 2021
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.
If you save outside of an ISA, the Personal Savings Allowance (PSA) may apply. The PSA lets non- and basic-rate taxpayers earn some interest each tax year before they pay any tax on it. But your individual allowance will depend on which income tax band you fall into.
The PSA for basic rate tax payers is £1,000. This drops to £500 for higher rate tax payers and additional rate tax payers don’t get a PSA at all. Nonetheless the PSA means that lots of savers don’t have to worry about paying any tax on their savings interest.
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 UK, not Scottish, income tax bands. Tax rules can change and benefits depend on personal circumstances.
If your non-savings income is less than £17,750 you may be able to earn more interest before you pay any tax on it. This is called the starting rate for savings.
Read more about tax on savings interest
You could consider saving into a Cash ISA. A Cash ISA is an Individual Savings Account, and is a tax-efficient way to save. Unlike other savings accounts, all interest earnt in a Cash ISA is free from UK income tax without using any PSA .
Each tax year (6 April to 5 April) there’s a limited amount of money you can put in ISAs. This tax year the ISA allowance is £20,000. You can split your allowance between one of each type of ISA as long as you don’t exceed the total allowance across them all.
Cash ISAs may offer different interest rates from other types of savings accounts.
Discover Active Savings
If you’re looking to build your savings, Active Savings could help. It’s unlike most other savings accounts, giving you more choice. Through one online account you can choose easy access and fixed term savings products from a range of different banks and building societies.
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 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 2122142).