Starting rate for savings
The starting rate for savings is a 0% rate of tax which can apply for up to £5,000 of savings income. It only applies if your non-savings and non-dividend income is below a certain threshold.
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Note that dividend income is taxed after savings income. As a result, if you have dividend income it will not affect whether you are eligible for the starting rate for savings on your savings income.
The starting rate for savings will only apply to you if:
- you have some savings income, and
- your earned income and other non-savings, non-dividend income, before deducting the personal allowance (and blind person’s allowance, if eligible), is lower than a certain limit (see below).
For information on the types of income that are counted as savings income, see our page Tax on savings and investments.
Upper and lower limits
The guide below just provides the general rule. This may not provide you with the correct result if you have additional tax allowances or expenses that you can claim. These figures also assume that you have not given up part of your personal allowance as part of a claim to the marriage allowance.
Not eligible for the blind person’s allowance
If you are not eligible for the blind person’s allowance and you have taxable earned and other non-savings, non-dividend income of between £12,570 and £17,570 in 2023/24, the savings rate will apply to at least part of your savings income (as in the example below). This threshold of £17,570 in 2023/24 is the £12,570 personal allowance plus the £5,000 starting rate for savings band.
Eligible for the blind person’s allowance
If you are eligible for the blind person's allowance, the upper limit described above will be increased by the amount of the blind person’s allowance and you will get the savings rate if your taxable non-savings, non-dividend income in 2023/24 is between £12,570 and £20,440.
This threshold of £20,440 in 2023/24 is the £12,570 personal allowance plus £2,870 blind person’s allowance plus £5,000 starting rate for savings band.
Taxable income above the upper limits
If your taxable earned and other non-savings, non-dividend income is above the upper limit described above of £17,570 for 2023/24 (or £20,440 if you are eligible for the blind person’s allowance), the starting rate for savings will not apply to your taxable savings income. You will pay tax at the savings rates of tax on your taxable savings income, depending on which tax band it falls in.