Sarah Bradford explains how savings income is taxed in 2025/26 and highlights opportunities for enjoying savings income tax-free.
The taxation of savings income can be complicated, as various reliefs and bands come into play.
The position is further complicated as the tax breaks that are available depend on the level of both the taxpayer’s total income and their taxable non-savings income.
Personal allowance
To the extent that it has not been used elsewhere, the personal allowance is available to shelter income from savings. For 2025/26, the personal allowance is set at £12,570.
However, once adjusted net income reaches £100,000, the personal allowance is reduced by £1 for every £2 by which adjusted net income exceeds £100,000. An individual with adjusted net income of £125,140 and above
