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Your personal savings allowance is the amount of interest you can earn on your savings, before you have to start paying tax.
Since 6 April 2016:
Basic rate tax-payers can earn £1,000 in interest before paying tax.
Higher rate tax-payers can earn £500 in interest before paying tax.
Additional-rate taxpayers don't qualify for this allowance.
Interest earned from ISAs doesn't count towards your personal savings allowance, because it's already tax-free.
If you need to pay tax on your savings
If you have any savings income over your personal savings allowance, you'll have to pay some tax on this. HMRC will normally collect the tax by changing your tax code.
We don't deduct tax from the interest you earn on our savings accounts.
You don't need to fill in an R85 or R105 form to claim your allowance - the changes are automatic.
If you already do a self-assessment tax return, you should continue to report your savings interest income there.
In some rare cases, such as compensation payments, tax might still be deducted. This interest still counts towards your allowance, so you may want to talk to HMRC to reclaim any overpaid tax.
