Personal Savings Allowance

HSBC UK
Savings accounts
Personal Savings Allowance

Most UK taxpayers receive a ‘Personal Savings Allowance’(PSA) that lets you earn interest on your savings, up to a certain limit, without being taxed.

How much is the Personal Savings Allowance?
Tax bracket	Personal Savings Allowance
20% tax bracket	Up to £1,000
40% tax bracket	Up to £500
Additional rate taxpayers	No allowance

How much is the Personal Savings Allowance?
Tax bracket	20% tax bracket	20% tax bracket
Personal Savings Allowance	Up to £1,000	Up to £1,000

Tax bracket	40% tax bracket	40% tax bracket
Personal Savings Allowance	Up to £500	Up to £500

Tax bracket	Additional rate taxpayers	Additional rate taxpayers
Personal Savings Allowance	No allowance	No allowance

Your Personal Savings Allowance will depend on what tax bracket you fall into.

What is savings income?

Savings income is the amount of money you earn from your savings. This includes:

interest from banks and building societies
interest from other account providers, such as credit unions
interest distributions (but not dividend distributions) from authorised unit trusts, open-ended investment companies and investment trusts
income from government, or company bonds
some types of purchased life annuity payments
gains from certain life insurance contracts

Is ISA interest included in the Personal Savings Allowance?

Individual Savings Accounts (ISAs) and some National Savings and Investments (NS&I) products are excluded from the Personal Savings Allowance. This is because the interest they earn is already tax-free.

What if your savings income exceeds the Personal Savings Allowance?

If your savings interest exceeds your Personal Savings Allowance, HMRC will collect any tax you owe on your savings accounts. This is usually done through a change to your tax code (based on information provided by banks and building societies), or through your annual tax return if you complete one.

What if you’ve paid too much tax on your savings interest?

If you’ve paid too much tax, you may be able to claim this back. You’ll need to fill in form R40 (or form R43 if living outside the UK) and send it to HMRC. These forms are available online at GOV.UK. You can claim back overpaid tax on your savings from up to 4 years prior.

What if your accounts relate to an organisation, or an estate?

Only individuals get a Personal Savings Allowance. If your accounts relate to a business, charity, club or association, they'll earn interest without tax deducted.

If you’re a trustee or are administering an estate, HSBC won’t deduct the tax from the credit interest paid. Any tax due will have to be paid through the trust/estate tax return.