Starting rate for savings

How taxable non-savings income consumes the £5,000 starting-rate limit before savings income is charged at 0%.

Taxable non-savings income consumes the starting-rate limit

Reviewed · Current · Law · 6 April 2023 to 5 April 2031

£5,000

0%

Up to £5,000 of savings can be charged at the 0% starting rate, reduced pound for pound by taxable non-savings income.

The limit is applied to Step 3 income in statutory order. A person with £4,999.99 taxable non-savings income can have one penny of savings at the starting rate; at exactly £5,000 none remains.

Exceptions and branches

• The limit applies after allowances and is not an extra £5,000 deduction.

How the limit is consumed

Every £1 of taxable non-savings income consumes £1 of the £5,000 starting-rate limit. The remaining lowest savings income can then be charged at 0%.

• With £4,999.99 of taxable non-savings income, one penny of savings can use the starting rate.

• At exactly £5,000 of taxable non-savings income, none of the starting-rate limit remains.

This is a rate band after allowances, not an extra £5,000 deduction. The separate Personal Savings Allowance may still charge later savings income at the savings nil rate.

Related concepts

• Savings Income Tax

• Personal Savings Allowance

• Simple savings Income Tax calculation

• Personal Allowance

Linked from

• Savings Income Tax

• Personal Savings Allowance

• Simple savings Income Tax calculation

Sources

• Income Tax Act 2007, section 12 — Section 12. Primary authority.

• Finance Act 2026, section 9 — Section 9. Primary authority.

• HMRC Savings and Investment Manual SAIM1080 — Starting rate for savings; Personal Savings Allowance. Official guidance.

• Tax on savings interest — Starting rate for savings; tax-free savings allowance. Official guidance.

How sources are ranked

Knowledge version: sterling-knowledge@2026-09-11.7. Last checked 11 September 2026.