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What is the Personal Savings Allowance (PSA)?

On 6 April 2016 the Personal Savings Allowance (PSA) launches which means every basic rate taxpayer (people who pay 20% tax on income) can earn £1,000 interest per tax year on their savings income without paying tax on the interest earned.

Higher rate taxpayers (people who pay 40% tax) get a £500 Personal Savings Allowance whilst additional rate taxpayers (paying 45% tax) don't get any allowance.