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What is the Personal Savings Allowance?
And what does it mean for your savings?
February 17, 2026
The Personal Savings Allowance (PSA), introduced on 6 April 2016, allows most UK savers to earn tax-free interest on their savings up to certain limits each tax year (6 April to 5 April).
What is my Personal Savings Allowance?
The amount you can earn in interest each year with the Personal Savings Allowance varies depending on your Income Tax band:
| Income tax band (England and Wales) | Income tax rate |
Personal Savings Allowance |
|---|---|---|
| Basic rate | 20% | £1,000 |
| Higher rate | 40% | £500 |
| Additional rate | 45% | £0 |
| Income tax band (England and Wales) | Income tax rate | Personal Savings Allowance |
|---|---|---|
| Basic rate | 20% | £1,000 |
| Higher rate | 40% | £500 |
| Additional rate | 45% | £0 |
†Scottish savers: this works differently for you
What counts towards your Personal Savings Allowance?
The interest you earn on savings held in Individual Savings Accounts (ISAs) is free from tax* and doesn’t count towards your Personal Savings Allowance. Most other savings income, including interest on a savings account or current account, counts towards your Personal Savings Allowance.
*Tax-free is the rate payable where interest is exempt from UK income tax. Your savings balance will be eligible for this tax benefit for so long as it is held in a valid cash ISA account.
The tax treatment of ISAs and the applicable Government rules are subject to change. The benefits of your account for tax purposes will depend on your personal financial circumstances.
This article is for informational purposes only and is not a substitute for individualised professional advice. Articles on this website were commissioned and approved by Marcus by Goldman Sachs®, but may not reflect the institutional opinions of The Goldman Sachs Group, Inc., Goldman Sachs International Bank, Goldman Sachs & Co. LLC or any of their affiliates, subsidiaries or divisions. Information and opinions expressed in this article are as of the date of this material only and subject to change without notice. This article is not a product of Goldman Sachs Global Investment Research. The information contained in this article does not constitute a recommendation from any Goldman Sachs entity to the recipient, and Goldman Sachs is not providing any financial, economic, legal, investment, accounting, or tax advice through this article or to its recipient. Neither Goldman Sachs nor any of its affiliates makes any representation or warranty, express or implied, as to the accuracy or completeness of the statements or any information contained in this article and any liability therefore (including in respect of direct, indirect, or consequential loss or damage) is expressly disclaimed.
| Savings interest rate (AER)(1) |
Savings Balance Before Paying Tax | |
| Basic rate taxpayer | Higher rate taxpayer |
|
|---|---|---|
| 1% | £100,000 | £50,000 |
| 2% | £50,000 | £25,000 |
| 3% | £33,333 | £16,667 |
| 4% | £25,000 | £12,500 |
| 5% | £20,000 | £10,000 |
The content in this article is for information only and is not advice. All content in this article was accurate on the date of publication shown above.
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