What tax do you pay on savings interest?

Which tax rate applies?

Simple:

Figure out what your tax-free allowance is
The rest of your savings interest gets taxed at the usual Income Tax rate.

What about ISAs?

You never pay tax on gains from ISAs.

They also don’t count towards your allowance.

How much can I earn tax-free from savings interest?

It depends on your Income Tax band:

Income Tax band	Tax-free savings allowance
If you only earn savings interest (this is very rare)	You can use your Personal Allowance – £12,500
Low earner (other income under the Personal Allowance)	up to £5,000
Basic rate	£1,000
Higher rate	£500
Additional rate	£0

What counts as “savings interest”?

Any interest you earn from:

bank accounts (the most common one)
credit unions and building societies
bonds.

But also:

interest earned on other currencies (USD, EUR, …) held in UK-based accounts
P2P lending interest (the kind you get from LendingCrowd, Funding Circle, etc., but excluding what you get from their Innovative Finance ISAs)
life annuity payments.

How about interest from joint accounts?

Usually it’s split 50-50 between partners – but not always.

How do I pay tax on savings interest?

If you’re PAYE or pensioner, you don’t need to do anything: HMRC will change your tax code automatically
Or through a self assessment tax return.

Important to remember

your bank will not withhold tax for you
if you received more than £10,000 in interest, you’ll need to complete a self assessment tax return regardless
HMRC estimates your interest every year when changing your tax code – if you ever overpay, just fill in Form R40 and get your tax back.

We’re here if you need help.

How TaxScouts works

1. Simple online tax assessment

Our online tax-bot will go over your tax situation and will make sure you won’t overpay your taxes.

2. Chat to human advisors

You can talk to one of our tax assistants at any time during the process when you have any questions.

3. We’ll sort your documents online

We’ll tell you exactly what documents you need and sort them for you online. You just upload them or snap a picture with your phone.

4. Everything gets prepared for you

Your certified accountant will go over your details & prepare your tax return for you to review. It will be filed on your behalf once you approve it.

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Who our service is for

First time tax filers

We have a simple online service that guides you through the entire process. Regardless of your reasons for doing your tax return we'll help you get it done right.

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We'll prepare your self assessment and help to maximise your CIS tax refund. We have the lowest fees in the industry and you don't have to pay up front if you're eligible for a refund.

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Our service allows people living abroad to prepare their income tax return online. We are able to process all returns regardless of your current country of residence.

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UK company directors are required to file their self assessment annually. TaxScouts handles this through a simple online process.

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TaxScouts ensures the self employed don't overpay on their taxes. We'll help you benefit from all the tax breaks and deductions that can be applied to your return.

And for everyone else who needs to do their self assessment

At TaxScouts we appreciate that tax returns are highly individual. Before you get assigned an accountant we make sure to understand your circumstances and help you build your optimal tax profile.