Personal Savings Allowance explained

• You save £5,000 in a savings account with a 3.50% AER/gross a year (fixed) interest rate.
• You leave the money in the account for a whole tax year, making no withdrawals or deposits.
• You earn £175 in interest.
• This is the only interest you earn – you do not have money in any other accounts that earn interest.

If you were an additional rate taxpayer, you would pay tax on the £175 interest because you have no Personal Savings Allowance.

If you were a basic or higher rate taxpayer, you would not pay any tax as £175 is under your £500 or £1,000 Allowance. A basic rate taxpayer would then have £825 left of their allowance and a higher rate taxpayer would have £325 left of their allowance.

• You save £5,000 in an ISA with a 3.50% AER/tax-free (fixed) interest rate.
• You leave the money in the account for a whole tax year, making no withdrawals or deposits.
• You earn £175 in interest.
• This is the only interest you earn – you do not have money in any other accounts that earn interest.

Because you have saved into an ISA, and you have saved an amount that is less than your ISA allowance, none of the interest you earn will contribute to your Personal Savings Allowance.

It is important to know the difference between your ISA allowance and your Personal Savings Allowance.

The interest you earn in an ISA does not contribute to your Personal Savings Allowance.

This tax year, you can deposit up to £20,000 across your ISAs. The interest you earn in an ISA and transferring an ISA that holds money you saved in a previous tax year do not count towards your ISA allowance. So to maximise your interest without the tax burden, you could consider opening a cash ISA.

You could pay tax on your savings in non-ISA savings accounts. This depends on your Personal Savings Allowance and other income.

Compare Nationwide cash ISAs

We can provide an interest certificate for certain accounts, which shows the interest you have earned on your Nationwide savings.

We can only provide interest certificates covering up to the last 5 tax years.

If your account is open:

1. Log in to our internet bank (opens in a new window).
2. Select your account.
3. Select Other account services.
4. Go to Interest.
5. Select Request an interest certificate.
6. Select the relevant tax year.
7. Select Request certificate.

If your account is closed:

1. Log in to our internet bank (opens in a new window).
2. Under the Manage tab, under My accounts select View my interest & tax paid.
3. Select Request Interest Certificate for closed accounts.
4. Enter your account number. You can find this on old letters, emails or statements from us.
5. Select the relevant tax year.
6. Select Request certificate.

You can also visit any Nationwide branch.

Your Personal Savings Allowance covers interest from a range of accounts, including:

• bank and building society accounts
• savings and credit union accounts
• unit trusts, investment trusts and open-ended investment companies
• peer-to-peer lending
• trust funds
• payment protection insurance (PPI)
• government or company bonds
• life annuity payments
• some life insurance contracts

It includes the interest you earn from Nationwide current accounts, like FlexDirect, and any of our non-ISA savings accounts.

The interest you earn on money saved in ISAs, up to your ISA allowance, does not count.

We report the amount of interest you have earned to HM Revenue & Customs (HMRC) each tax year.

If you do not complete Self Assessment Tax Returns

If you owe any tax, HMRC will contact you and adjust your tax code.

The letters are sent between June and March of the following tax year.

If you complete Self Assessment Tax Returns

You should report any interest earned in your tax return (opens in a new window).

You will then pay any tax owed through that process.

If you have a joint savings account, HM Revenue & Customs (HMRC) will split your interest equally between both the account holders.

Your Allowances will depend on both of your Income Tax bands.

More about joint accounts from HMRC (opens in a new window)

If you are interested in opening a Nationwide joint savings account, compare our range of joint savings.

Pensioners are treated the same as employees when it comes to the Personal Savings Allowance.

HM Revenue & Customs (HMRC) will change your tax code if you earn more than your Allowance.

They will base this on how much interest you earned in the previous tax year.

If you make the most of the tax-free savings options available, you are unlikely to pay tax on your savings interest.

You can deposit up to £20,000 across your ISAs this tax year. All the interest you earn on your deposits up to £20,000 is completely tax-free.

You can combine this with your Personal Savings Allowance of up to £1,000 for basic rate taxpayers and up to £500 for higher rate taxpayers.

The tax usually occurs when you need to save a significant lump sum, such as following an inheritance.

Learn more ways to help you save