[ˈpɜːsᵊnᵊl ˈseɪvɪŋz əˈlaʊəns]
Personal Savings Allowance is the amount of interest earned from savings, bonds, or peer-to-peer loans that is tax-free, and it depends on your Income Tax band.
The Personal Savings Allowance is a scheme in the United Kingdom that allows eligible individuals to earn some interest from savings accounts, bond or Peer-to-peer loans tax-free.
This allowance does not apply to interest from Individual Savings Accounts as this interest is always tax-free.
The amount of allowance available depends on an individual's Income Tax band. For the 2023/24 Tax Year, Basic Rate taxpayers get £1000 of tax-free savings allowance. Higher Rate taxpayers get £500 while Additional Rate taxpayers get no Personal Savings Allowance.
If you are an Employee and earn more interest than the Personal Savings Allowance, HMRC will change your Tax Code and take the tax owed automatically. If you are Self-employed and earn more interest than your tax-free allowance, you must include this information in your Self Assessment.
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