Savings, explained
How the main UK savings accounts work, how your money is protected, and how savings interest is taxed in 2026/27.
Savings rates comparison
This table shows facts only and is ordered by AER (highest first) by default. Click a column heading to re-sort. It is not a recommendation – the right account depends on your circumstances. Always check the provider's own page before applying.
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The main types of savings account
Easy access
You can pay in and take money out when you like. The rate is usually variable, so it can go up or down at any time – often following changes to the Bank of England Bank Rate (currently 3.75%). Some accounts limit the number of withdrawals.
Notice accounts
You must give notice (for example 30, 60 or 95 days) before withdrawing. Rates are usually variable.
Fixed-rate bonds
You lock money away for a set term (often 1–5 years) at a fixed rate. You usually cannot add money after opening, and early access is often not allowed or carries a penalty. Interest may be paid monthly, yearly or at maturity – which can affect which tax year it falls in.
Cash ISAs
Interest in an ISA is free of UK Income Tax and doesn't use your Personal Savings Allowance. For 2026/27 the overall ISA allowance is £20,000, which you can put entirely into a cash ISA. Cash ISAs come in easy access, notice and fixed versions. Check whether yours is "flexible" (lets you withdraw and replace money in the same tax year).
Regular savers
You pay in a fixed monthly amount (often £25–£500) for usually 12 months. Headline rates can look high, but because money goes in gradually, the interest you actually earn is roughly half what the AER suggests on the full year-end balance. Many require a current account with the same provider.
FSCS protection: £120,000
Since 1 December 2025, the Financial Services Compensation Scheme protects eligible deposits up to £120,000 per person, per authorised firm (it was £85,000 from 2017 to 30 November 2025). Key points:
- Brands that share one banking licence count as one firm, so the limit covers your total across them.
- Joint accounts: each holder is protected up to £120,000.
- Temporary high balances (for example from a house sale or inheritance) can be protected up to £1.4 million for up to six months.
- Cash ISAs with UK-authorised banks and building societies are covered.
You can check a firm on the FSCS protection checker.
How savings interest is taxed (2026/27)
| Allowance | 2026/27 |
|---|---|
| Personal Allowance | £12,570 (reduced by £1 for every £2 of income over £100,000) |
| Starting rate for savings | 0% on up to £5,000 of savings income – reduced by £1 for every £1 of other income above your Personal Allowance |
| Personal Savings Allowance – basic-rate taxpayer | £1,000 |
| Personal Savings Allowance – higher-rate taxpayer | £500 |
| Personal Savings Allowance – additional-rate taxpayer | £0 |
| Savings tax rates above allowances | 20% basic, 40% higher, 45% additional |
Example: if your only income is a salary of £15,000, your other income is £2,430 above the Personal Allowance, so your starting rate band is £5,000 − £2,430 = £2,570. You could then earn £2,570 of interest at 0% plus £1,000 under the Personal Savings Allowance before paying tax.
Sources (checked 12 October 2026): GOV.UK – Budget 2025 OOTLAR Annex A: rates and allowances (2026 to 2027); GOV.UK – Tax on savings interest; GOV.UK/HMRC – Changes to tax rates for property, savings and dividend income (27 Nov 2025); FSCS – Deposit protection limit; GOV.UK – Individual Savings Accounts (ISAs); GOV.UK/HMRC – Cash ISA limit reduction (from 6 April 2027); legislation.gov.uk – The Individual Savings Account (Amendment) (No. 2) Regulations 2026 (SI 2026/1018); Bank of England – Bank Rate.