This website uses cookies to ensure you get the best experience. Please read our policies for more information.

10 Chartered Accountants

News

Confusion on savings interest – HMRC weighs in
13 January 2025

HM Revenue & Customs (HMRC) has clarified that if your earnings from interest exceed £10,000, tax may apply depending on the account type.

This clarification came when a customer reached out to the tax authority on X to see if they needed to file a tax return after earning more than £2,000 in interest.

HMRC explained that if interest exceeds £10,000, a Self-Assessment tax return should be prepared and submitted within the usual deadlines, to calculate whether any tax is due.

Tax-free options for saving

Interest earned from individual savings accounts (ISAs) and some National Savings Investments (NS&I) accounts is tax-free.

For example, taxpayers can save £20,000 annually in ISAs without paying tax on the amount deposited or any interest, income or capital gains from investments in an ISA.

All savers also benefit from the Personal Savings Allowance (PSA), which allows you to earn up to £1,000 of interest before you pay tax depending on your marginal rate.

Income Tax band Personal Savings Allowance
Basic rate £1,000
Higher rate £500
Additional rate £0


To avoid unexpected tax liabilities, you must be aware of these thresholds and account types to make use of the tax-free allowances available to you.

Seeking the help of a tax advisor is the best way to ensure you are making informed decisions to maximise your savings.

Get in touch if you need further clarity or guidance on whether you need to pay tax on savings interest.

Other recent news

Are tax rises on the horizon? What recent activity at The Treasury means for you and your business
09 July 2025

While the 2025 Spending Review focused on long-term investment rather…
Read more

Cash flow constraints – 57 per cent of businesses warn of rising costs
09 July 2025

57 per cent of small to medium-sized enterprises (SMEs) have…
Read more

Child Benefit repayments changing for thousands this summer
09 July 2025

The way families make Child Benefit repayments to HM Revenue…
Read more

Are your systems ready for MTD? Five things to check as the clock ticks down
09 July 2025

HM Revenue and Customs (HMRC) is working to enhance compliance…
Read more

Green levies on UK businesses to be cut
09 July 2025

The UK Government has confirmed that it will reduce green…
Read more

»

Case Studies