What is the Personal Savings Allowance?

Open a Crowdstacker P2P account today and you could start benefiting from tax free interest with the new Personal Savings Allowance (PSA).

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What is the Personal Savings Allowance?

The Government has introduced a great new way for the vast majority of British adults to grow their savings each year (including bonds, loan notes and peer to peer loans) without paying tax on up to £1,000 of interest per tax year.

It is called the Personal Savings Allowance (PSA).

Eligible investors can earn up to £1,000 interest on their savings each tax year without paying tax. Previously this was taxed at an individual’s marginal income tax rate.

Like income tax, the Personal Savings Allowance depends on your income bracket:

If you are a basic rate tax payer (i.e. your annual income is less than £43,000) you can earn up to £1,000 interest on savings tax free per tax year.

If you are a higher rate tax payer (i.e. your annual income is between £43,001 and £150,000) you can earn up to £500 interest on savings tax-free per tax year.

If you are an additional rate tax payer (i.e. you earn over £150,000 per year) unfortunately you do not qualify for a Personal Savings Allowance.

Crowdstacker's Peer to Peer investments are eligible for inclusion in the Personal Savings Allowance. Simply open a Crowdstacker P2P Account today and start lending to British businesses through the platform. Up to a £1,000 of your interest earned is eligible to be tax-free with the PSA (subject to any other savings or PSA qualifying investments you may have and your tax status). Your capital is at risk if you lend to businesses.

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Personal Savings Allowance Calculator

Enter the details below of your current and future savings and Peer to Peer investments to see out how much interest you might earn each year and if this is covered by your Personal Savings Allowance. Please note you can enter the amount in pounds and pence but do not use commas.

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Your capital is at risk if you lend to businesses. View full risk warning for more information.

Frequently asked questions

Find out more about the Personal Savings Allowance

Answer

It depends on what rate of tax you pay:

Basic-rate (20%) taxpayers – will be able to earn £1,000 interest per tax year with no tax.
Higher-rate (40%) taxpayers – will be able to earn £500 interest per tax year with no tax.
Additional-rate (45%) taxpayers: £0 – unfortunately they do not qualify for an allowance.

The following types of savings and investments are eligible for the PSA:

Peer to Peer investments
bank and building society accounts
accounts with providers like credit unions or National Savings and Investments
interest distributions (but not dividend distributions) from authorised unit trusts, open-ended, investment companies and investment trusts
income from government or company bonds,
most types of purchased life annuity payments.

No. Interest that is already tax-free isn't included in the Personal Savings Allowance. Interest from these tax-free accounts will still be paid tax-free, it just won't count towards your PSA limit. So, if you get £500 in ISA interest, and you're a basic-rate taxpayer, you'll still have £1,000 of PSA to cover other interest.

No, the same rules apply.

You don’t need to do anything to claim your Personal Savings Allowance.

If you’re a basic rate taxpayer and have savings income or interest of more than £1,000 (£500 for higher rate taxpayers), you’ll have to pay some tax on the amount above your Personal Savings Allowance. But you don’t need to do anything yet.

If your savings income exceeds the thresholds, HMRC will normally collect the tax by changing your tax code. The account provider will give HMRC the information they need to do this.

If you fill in a Self-Assessment tax return you should carry on doing this as normal.

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