Do I have to pay tax on my interest?
Updated 9 months ago
All UK savings accounts pay you gross interest, which means nothing is taken off for tax. But there are some differences for you depending on what account you're saving with.
Depending on your individual circumstances, you may need to declare your earnings to HRMC if they exceed your annual Personal Savings Allowance (PSA). Introduced in 2016/17, the PSA gives all tax-payers a tax-free savings allowance. If you're a basic rate tax-payer, you can earn up to £1,000 per year tax-free. Higher earners can earn up to £500 per year.
You may need to consider paying tax on earnings for the tax year during which the interest was applied to your account.
You don’t have to pay any tax on the interest you earn in the Smart ISA. You have an annual ISA allowance of £20,000. This is the maximum amount you can put into ISAs each tax year, from 6th April to 5th April.
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