At the best easy-access rate available today (5% AER from Starling Bank), a basic-rate taxpayer starts paying tax on savings interest once their balance passes about £20,000, and a higher-rate taxpayer at about £10,000. Additional-rate taxpayers have no Personal Savings Allowance, so all of it is taxable. Rates last verified 12 Oct 2026; checked daily.
| Tax band | Tax-free interest | Balance it takes |
|---|---|---|
| Basic rate (20%) | £1,000 | £20,000 |
| Higher rate (40%) | £500 | £10,000 |
| Additional rate (45%) | Nil | Any balance |
Assumes one account paying the best live easy-access rate and no other savings interest. Balances are rounded down, so each one is still inside the allowance rather than a pound over it.
The allowance is fixed in interest and has not moved since 2016, so the balance it corresponds to moves entirely with rates. At 1% it took a six-figure balance to produce £1,000 of interest. At today's rates it takes roughly a fifth of that. Nobody is told when they cross it — banks report interest to HMRC and the tax usually arrives as a change to a PAYE code, often a year later.
Two things push the threshold back up: a cash ISA, where interest sits outside the allowance entirely, and Premium Bonds, whose prizes are tax-free but pay nothing in most months — see how Premium Bonds compare. Fixed-rate bonds can also work against you, because interest paid at maturity can land in a single tax year.
A current-account switch bonus is normally a promotional payment rather than interest, so it does not eat into this allowance at all. Regular-saver interest does. The distinction is worth more than it sounds if you are running both — the tax treatment of switch bonuses covers it, and regular savers are where most people quietly build up taxable interest.
General information, not tax advice. Check your own position with HMRC or an accountant.
Machine-readable version of this answer: /savings-tax-threshold/feed.json.