Yes, tax-free savings accounts do come with some limits. Low-income earners who earn up to £17,570 a year are eligible for the starting savings rate. This includes your total personal allowance of £12,570, which is the amount you can earn before paying tax, plus the starting rate of £5,000.
As previously mentioned, the PSA allows anyone to earn a certain amount of money from their savings without paying tax, depending on their savings earnings and tax band. If you’re a basic-rate taxpayer, you can earn up to £1,000 in savings interest per year without paying tax on that interest, and higher-rate taxpayers can earn up to £500. This will increase your tax-free savings limit to £18,570, which includes your personal allowance of £12,570 (assuming you have not used this up on your wages, pension or other income), starting savings rate (£5,000) and your personal savings allowance of £1,000.
There are some exemptions and differences, depending on your personal circ*mstances. For example, the blind person’s allowance for the tax year 2023-24 is £2,870. You might also be eligible for the married couple’s allowance.
