I’m a zero-rate taxpayer, so what is my personal savings allowance?

Published by David Wesley-Yates on 12 June 2019.
Last updated on 12 June 2019


When it comes to the personal savings allowance, everyone seems to talk about basic and higher rate taxpayers. But what about a zero-tax rated pensioner with only state pension income (circa £8,000 a year) and a very small savings interest income? Would any further savings interest income be tax-free up to the current annual personal allowance? If so, would the £1,000 tax-free savings allowance be available to be added to the personal allowance, as is suggested happens with lower rate taxpayers?

And as a zero-rated taxpayer what savings interest tax would an individual be liable for and where would it start while under the personal allowance?



An extra tax break already helps those on a low income either pay no tax or reduced tax on their savings. This £5,000 ‘starting rate for savings’ means anyone with total taxable income under their personal income tax allowance plus £5,000 will not pay any tax on their savings. 

So if your total taxable income is less than £18,500 in 2019-20, you won’t pay any tax on your savings.

It helps to think of these allowances sitting on top of each other: first the personal allowance (£12,500 for 2019-20); then the £5,000 starting savings rate at 0%; finally the personal savings allowance worth up to £1,000.

When HMRC calculates the tax you owe, they first look at your income from other sources, then your savings income. For example, if you earn £8,000 a year from a pension and £9,850 interest from savings, you won’t pay any tax.

This article was written in response to a reader’s question. If you have a financial or work/career question that has left you scratching your head ask our panel of experts who will aim to shine some light on the matter.

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