Overview
- The four tools he highlights are the Personal Allowance (£12,570), the Starting Rate for Savings (up to £5,000), the Personal Savings Allowance, and Cash ISAs with a £20,000 annual limit.
- The Starting Rate for Savings is targeted at low earners with higher savings interest and tapers pound‑for‑pound once income exceeds £12,570, disappearing entirely at £17,570.
- The Personal Savings Allowance lets basic‑rate taxpayers earn £1,000 of interest tax‑free each year (£500 for higher‑rate, none for additional‑rate), which at roughly 4.5% interest equates to breaching limits at a little over £22,000 or about £11,000 saved respectively.
- Interest earned inside a Cash ISA is separate from and does not count toward the Personal Allowance, the Starting Rate for Savings or the Personal Savings Allowance.
- The guidance reiterates existing HMRC rules and reflects a renewed push for savers to review accounts as higher rates increase the risk of paying tax on interest.