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Glossary · Tax

PSA (Personal Savings Allowance)

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Definition: A tax-free allowance for savings interest — £1,000 for basic-rate taxpayers, £500 for higher-rate, £0 for additional-rate.

Above the PSA, savings interest is taxed at your marginal Income Tax rate. The £5,000 starting rate for savings sits below the PSA and is reduced by other non-savings income above £12,570.

Primary source: gov.uk/apply-tax-free-interest-on-savings

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