Savings income nil rate band (UK)
For 2025–26, the savings income nil rate band is £1,000 for a basic-rate taxpayer, £500 for a higher-rate taxpayer and nil for an additional-rate taxpayer. Savings income taxed at 0% under this band still uses the relevant income-tax bands. The separate savings starting rate may apply depending on other taxable income. Apply the individual’s full computation and the relevant tax-year rules; this is distinct from tax-exempt interest in an eligible ISA.
Worked example
For 2025–26, assume a higher-rate taxpayer has £1,000 taxable bank interest, no available savings starting-rate band and all interest falls within the higher-rate band. £500 is taxed at 0% and £500 at 40%, producing £200 tax on the interest.
Common mistake
Treating the savings nil-rate amount as omitted from taxable income and rate-band usage, or granting the basic-rate £1,000 amount to every taxpayer.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | TX (UK) | Direct | June 2026–June 2027 |