Your allowances for earning interest before you have to pay tax on it include your: Personal Allowance starting rate for savings Personal Savings Allowance You get these allowances each tax year (6 April to 5 April). How much you get depends on your other income. You can get an estimate of how much tax you have to pay on interest from your savings . Personal Allowance If your Personal Allowance is not fully used by your wages, pension or other income, HMRC will apply it to your savings interest. Depending on your total taxable income for the tax year, you may be able to get the starting rate for savings or the Personal Savings Allowance on top of your Personal Allowance. Starting rate for savings If your other taxable income (not including savings interest or dividends) is less than £17,570, you can get the starter rate for savings. This means you can earn up to £5,000 of interest and not have to pay tax on it. The more you earn from other income (for example your wages or pension), the less your starting rate for savings will be. Every £1 of other income above your Personal Allowance reduces your starting rate for savings by £1. Example You earn £16,000 of wages and £200 interest on your savings. Your Personal Allowance is £12,570. It’s used up by the first £12,570 of your wages. The remaining £3,430 of your wages (£16,000 minus £12,570) reduces your starting rate for savings by £3,430. Your remaining starting rate for savings is £1,570 (£5,000 minus £3,430). This means you will not have to pay tax on your £200 savings interest. You can get the starting rate for savings as well as a Personal Savings Allowance. Personal Savings Allowance Depending on which Income Tax band you’re in, you may be able to earn up to £1,000 of interest without having to pay tax on it. This is your Personal Savings Allowance. To work out your tax band, add all the interest you’ve earned to your other income. Income Tax band Personal Savings Allowance Basic rate £1,000 Higher rate £500 Additional rate £0 If your savings interest is more than your allowance, you usually pay Income Tax on the amount above the allowance. Example HMRC estimates you earned £1,300 in savings interest in the previous tax year. Your Personal Savings Allowance is £1,000 because you’re a basic rate taxpayer. This means that the: first £1,000 is not taxed remaining £300 is taxed at 20% (basic rate) tax due on your savings interest is £60

How you pay tax on savings interest

You pay tax on any interest over your allowance at your usual rate of Income Tax . How you pay the tax will depend on the amount of interest you earned in the tax year. If your savings interest is £10,000 or less After the end of the tax year, your bank or building society tells HMRC how much interest you earned. If you’re registered for Self Assessment If you already send a Self Assessment tax return , report any interest earned on savings there. If you’re employed or get a pension If you have tax to pay on your savings interest, HMRC will send you a tax calculation. These are usually sent between June and the following March after the tax year ends. HMRC will usually collect the tax through your tax code. Your tax code may be changed to: collect any tax you owe from the previous tax year include an estimate of the savings interest you may earn in the current tax year Example You need to pay tax on savings interest you earned in the 2025 to 2026 tax year and have not already paid tax on this. HMRC tells you about the tax due in a tax calculation they send during the 2026 to 2027 tax year. The tax due is usually collected through your tax code in 2027 to 2028. Your tax codes for 2026 to 2027 and 2027 to 2028 may also include an estimate of tax on savings interest for that tax year. The estimated amount is based on the amount of interest you earned in 2025 to 2026. If you do not have a tax code or it cannot be changed, HMRC may send a Simple Assessment letter . The letter will explain: how much you owe how to pay when to pay If you have tax to pay on your savings interest and do not get a letter by 31 March of the following tax year, you must contact HMRC . If you think the amount of interest is wrong HMRC adds an estimated amount in your tax code for the current tax year (6 April to 5 April) based on the information given to them by your bank or building society for the previous tax year. You can see the estimated amount in the Personal Tax Account . Compare this amount with your average monthly interest from your bank and building society if you know it. Multiply that by 12 to get an estimated amount. If you think the amount HMRC has estimated is incorrect, contact HMRC to update this. You’ll then get a new tax code. After your bank and building society tells HMRC how much interest you earned at the end of the year, you’ll get a tax calculation letter if you have a tax overpayment or underpayment . Check your tax calculation letter against your statements, if you think any of the amounts are incorrect contact HMRC . If your savings interest is more than £10,000 You need tell HMRC how much interest you earned on a Self Assessment tax return . If your bank or building society tells HMRC that you have more than £10,000 in savings interest, HMRC will send you a notice to file a tax return. If you do not already complete a Self Assessment tax return you’ll need to register. Check if you need to send a tax return if you’re not sure.

If you've paid too much tax on your savings

The way you get a refund depends on whether you paid too much tax in the current tax year or in a previous tax year. If you’re paying too much tax in the current tax year If you think you’re paying too much tax on your savings interest, check the estimated amount of savings interest in your tax code. You can find this in your Personal Tax Account . Compare it with the amounts on your bank and building society statements. If the amount is wrong, contact HMRC to update it. HMRC will then update your tax code. If you’ve paid too much tax , they’ll ask your employer or pension provider to refund the difference through your pay or pension. After the end of the tax year, your bank or building society tells HMRC how much interest you earned. HMRC will send you a tax calculation if you have a tax overpayment or underpayment . If you’ve paid too much tax in a previous tax year You can claim back tax paid on your savings interest if your total income was below your Personal Allowance . You must claim within 4 years of the end of the tax year you want a refund for. How to claim If you send a Self Assessment tax return , claim the refund through your tax return. If you do not send a Self Assessment tax return, you can contact HMRC . You may have to provide evidence, if your bank or building society has already told HMRC the amount of interest they paid to you for the previous year. You can also claim a refund on your tax using the form R40 .

Tax on savings interest

Overview

Most people can earn some interest from their savings without paying tax on it.

Whether you pay tax depends on:

how much interest you earn
your other taxable income
your tax-free allowances

After 5 April each year, your bank or building society will tell HM Revenue and Customs (HMRC) about any interest they paid to you for the previous year. Check what to do if you have to pay tax on it.

This guide is also available in Welsh (Cymraeg).

Types of savings interest that you pay tax on

You may have to pay tax on savings interest you earn on money from:

bank and building society accounts
savings and credit union accounts

There are different rules for tax on foreign savings and children’s accounts.

Types of savings interest that you do not pay tax on

You do not usually have to pay tax on interest earned from savings in accounts like Individual Savings Accounts (ISAs) and some National Savings and Investments.

If you have a joint account

HMRC will split the interest earned equally between the account holders. Contact HMRC if you think it should be split differently.

If you have more than one savings account

HMRC will add together the interest from all your savings accounts to work out the total amount of interest you earned.

If you need to pay tax on your savings interest, HMRC will send you a tax calculation.

You’ll usually get your tax calculation as a letter in the post or a notification in your Personal Tax Account. It tells you how much tax you owe from the previous tax year and usually includes a breakdown of the saving accounts and the interest paid from each one.

View a printable version of the whole guide

Tax on savings interest

Overview

Types of savings interest that you pay tax on

Types of savings interest that you do not pay tax on

If you have a joint account

If you have more than one savings account

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Tax on savings interest

Overview

Types of savings interest that you pay tax on

Types of savings interest that you do not pay tax on

If you have a joint account

If you have more than one savings account

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