What is the starting rate for savings?
The starting rate for savings is an extra band of tax-free savings interest aimed at people with low non-savings income. If your earnings from work or pensions are low, you may be able to receive a substantial amount of savings interest at a 0% rate, on top of your Personal Savings Allowance.
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Check what you're owed →The starting rate for savings is often overlooked because it only helps people whose income from wages or pensions is relatively low. The lower your non-savings income, the more of this special 0% band you can use against your savings interest. As your other income rises, the amount of starting-rate band available reduces, and above a certain point it disappears.
It works together with your tax-free Personal Allowance and your Personal Savings Allowance, layering up to potentially shield a meaningful amount of interest from tax for people in the right circumstances — for example, those living mainly off savings, or with modest pensions and large cash balances.
Because the interaction between these allowances can be confusing, it is worth working through your figures carefully or checking the current rules on GOV.UK. People who could benefit, such as low earners and some retirees, sometimes pay tax on savings interest they did not need to, or fail to reclaim it, so understanding this band can be valuable.
How to check if the starting rate for savings applies
- Add up your non-savings income. Total your income from work, pensions and similar sources, as this determines how much starting-rate band you have.
- Identify your savings interest. Work out how much taxable savings interest you expect to receive in the year.
- Layer your allowances. Apply your Personal Allowance, then the starting rate for savings and Personal Savings Allowance to your interest.
- Reclaim if needed. If tax was taken when it should not have been, contact HMRC to put it right and recover what you are owed.
Key figures (official sources)
- up to £5,000Starting rate for savings (0% band)Reduced by £1 for every £1 of other income above the Personal Allowance.Source: GOV.UK — Tax on savings interest (checked 2026-06-28)
- £12,570Standard tax-free Personal AllowanceThe amount you can earn before paying Income Tax; reduced if income is over £100,000.Source: GOV.UK — Income Tax rates and Personal Allowances (checked 2026-06-28)
Frequently asked questions
- Who benefits from the starting rate for savings?
- People with low income from wages or pensions, who can then receive more of their savings interest tax-free than higher earners.
- Does it replace the Personal Savings Allowance?
- No. The starting rate for savings sits alongside both your Personal Allowance and your Personal Savings Allowance, layering up tax-free interest.
- Does it disappear as income rises?
- Yes. The more non-savings income you have, the smaller the starting-rate band becomes, until it is reduced to nothing.
- Can I reclaim tax if I was eligible?
- If tax was wrongly deducted or paid on interest covered by these allowances, you may be able to reclaim it from HMRC.
MoneyFinder is an independent sign-posting service that helps you find financial support you may be entitled to. We are not a government body and do not provide financial advice. Figures are taken from the official sources cited above and were correct when last checked — always confirm current details on the linked GOV.UK pages.