Guides › Public Services › Tax on Savings Interest: Allowances and HMRC Letters
Tax on Savings Interest: Allowances and HMRC Letters
Basic rate taxpayers can earn £1,000 of savings interest tax free each tax year under the Personal Savings Allowance, higher rate taxpayers £500 and additional rate taxpayers nothing. If your other income is under £17,570 you may also get up to £5,000 tax free under the starting rate for savings. ISA interest is usually tax free. Banks report interest to HMRC, which writes if you owe tax.
At A Glance
Your Rights
What the rules say, with a link to the official source for each.
Tax-Free Interest
Personal Savings Allowance
Basic rate: £1,000. Higher rate: £500. Additional rate: £0. These apply per tax year, 6 April to 5 April. source
Starting Rate
If your other taxable income is under £17,570 you can get up to £5,000 of interest tax free. Every £1 of other income over your Personal Allowance reduces it by £1. source
ISAs and HMRC Letters
Interest in ISAs is usually tax free. Banks report interest to HMRC after 5 April. If you owe tax, HMRC sends a calculation by letter or in your personal tax account. Joint account interest is split equally unless you tell HMRC otherwise. source
Time Limits to Know
Miss a deadline and you can lose a right. Check the dates on your own paperwork.
- 5 AprilEnd of the tax yearBanks report interest after this
Steps to Take
Step 1 of 5
Add up interest from all accounts, not counting ISAs.
Step 2 of 5
Check your tax band.
Step 3 of 5
Check any HMRC calculation against your bank statements.
Step 4 of 5
Tell HMRC if a joint account split is wrong.
Step 5 of 5
Consider an ISA for future savings.
(Tap the numbers to reveal steps)
Where to Go If It Is Not Put Right
Your options, in order, and when each one applies.
HMRC
Contact HMRC through your personal tax account, the HMRC app or the phone and post details on GOV.UK.
Your Personal Tax Account
Sign in on GOV.UK to check your tax code, income and letters.
Good to Know
Small things that make your complaint stronger.
HMRC adds together interest from all your accounts.
Scotland has its own Income Tax rates and bands. The rules on returns, penalties and HMRC complaints apply across the UK.
Want Help?
If you would like one of our team to look at your problem, our initial case review is free. We cannot guarantee any outcome and we do not give legal advice.
Lead reviewer
Luke Marley
Founder and Lead Reviewer
Luke founded CPUK in 2026 after seeing how hard it is for ordinary people to get problems with companies put right. He oversees our guides and checks them against official sources.
Research by Katie Burt, Co-founder and Operations Lead (17 years in the care sector, including managing services for vulnerable adults), and the CPUK Research Team. Researched with AI-assisted research tools, then checked and corrected by our team.
Last checked: 15 October 2026. We are not paid by the companies we write about. Adverts never affect our guidance. Read our editorial policy.
Sources and official links
- gov.uk/apply-tax-free-interest-on-savings/how-much-is-tax-free Checked 15 October 2026
- gov.uk/apply-tax-free-interest-on-savings Checked 15 October 2026