The short answer
Many people can earn some savings interest tax-free outside an ISA because of the Personal Savings Allowance. Basic-rate taxpayers usually get a £1,000 allowance, higher-rate taxpayers usually get £500, and additional-rate taxpayers normally get none.
Why the answer is often confusing
- The starting rate for savings can also help people with low non-savings income.
- ISA interest is already sheltered, so it does not use the Personal Savings Allowance in the same way.
- Your employment or pension income changes how much savings interest becomes taxable.
Best next page
Use Savings Interest Tax Calculator for the actual estimate and ISA vs GIA Calculator if you are deciding where future cash should sit.
Official source: GOV.UK tax-free interest on savings.