| Tax bracket | Personal Savings Allowance |
|---|---|
| 20% tax bracket | Up to £1,000 |
| 40% tax bracket | Up to £500 |
| Additional rate taxpayers | No 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.
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
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.
If your savings interest exceeds your Personal Savings Allowance, HMRC will collect any tax you owe. 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.
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.
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.
Opening a savings account can help you boost your savings. Take a look at the different types of accounts to see what could suit your needs.
If you need more guidance on your Personal Savings Allowance, visit HMRC, or speak to a tax adviser.
