The TL;DR
Most people don’t. The Personal Savings Allowance lets basic-rate taxpayers earn £1,000 of interest a year tax-free (£500 for higher-rate). Interest inside an ISA is always tax-free.
The detail
- At 4% you’d need about £25,000 saved to earn £1,000 in interest.
- If your other income is low, the starting rate for savings can make up to £5,000 more interest tax-free.
- Banks pay interest without taking tax off; HMRC adjusts your tax code if you go over.
Your 5-minute move
Your 5-minute move
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Related questions
Receipts · checked 9 November 2026