Savings
What is the Personal Savings Allowance?
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In short: Basic-rate taxpayers can earn £1,000 of cash savings interest a year tax-free; higher-rate £500; additional-rate £0.
The Personal Savings Allowance lets most people earn some interest on cash savings without paying any Income Tax on it. The amount depends on your tax band: £1,000 a year for basic-rate taxpayers, £500 for higher-rate, and nothing for additional-rate (45%) taxpayers.
Cash held inside a Cash ISA, NS&I Premium Bonds and most ISA-wrapped products is tax-free regardless of your PSA.
If you go over your allowance, HMRC usually collects the tax by adjusting your tax code automatically — banks send them the interest data each year.
Primary source: gov.uk/apply-tax-free-interest-on-savings
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