Updated on 6 April 2026

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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Introduction

The starting rate for savings applies to as much of the first £5,000 of taxable income that is savings income (after deducting the personal allowance and blind person’s allowance, if eligible). 

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 Tax on savings and investments.

The starting rate for savings does not need to be claimed – it applies automatically when your tax liability is calculated.

Upper and lower limits

The guidance below just provides the general rules. 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 2026/27, the savings rate will apply to at least part of your savings income (as in the example below). This threshold of £17,570 in 2026/27 is the £12,570 personal allowance plus the £5,000 starting rate for savings band.

Example – starting rate for savings

Suppose, in 2026/27, you are not eligible for the blind person’s allowance, you have pension income of £13,000 and savings income of £2,000, so you will have total income of £15,000.

This total income figure is less than £17,570, so you will be eligible for the starting rate for savings. We deduct the personal allowance (£12,570 in 2026/27) from the £13,000 of pension income, which leaves £430 left to be taxed at 20%. 

The starting rate for savings applies to as much of the first £5,000 of taxed income that is savings income. In this case, the starting rate for savings could apply to up to £4,570 of savings income (being £5,000 less the £430 of pension income left to be taxed after deducting the personal allowance). 

As the savings income is only £2,000, i.e. less than £4,570, all of it will be ‘taxed’ at the starting rate for savings, which is 0%. No tax will therefore be due on the savings income. 

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 2026/27 is between £12,570 and £20,820. 

This threshold of £20,820 in 2026/27 is the £12,570 personal allowance plus £3,250 blind person’s allowance plus £5,000 starting rate for savings band.

Example – starting rate for savings and blind person’s allowance

Carl lives in England and is registered blind. He has the following income in 2026/27: pension income of £18,000 and savings income of £2,000. This means his total income is £20,000.

Although his total income figure, and indeed his pension income, is more than £17,570, Carl is eligible for the starting rate for savings. This is because he is registered blind and eligible for the blind person’s allowance.

We deduct the personal allowance of £12,570 and the blind person’s allowance of £3,250 from his pension income of £18,000. This leaves £2,180 of his pension income to be taxed at the basic rate of 20%.

The starting rate for savings applies to as much of the first £5,000 of taxed income that is savings income. In this case, he has £2,820 of the starting rate for savings available (being £5,000 less the £2,180 of pension income left to be taxed after deducting the personal allowance).

As Carl’s savings income is only £2,000, all of it will be ‘taxed’ at the starting rate for savings, which is 0%. No tax will therefore be due on Carl’s savings income.

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 2026/27 (or £20,820 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 still be able to deduct your personal savings allowance, if applicable (not available for additional rate taxpayers), and will then pay tax at the savings rates of tax on the remainder, depending on which tax band it falls in.

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