The £18,570 savings opportunity

• Atom bank highlights the ‘little-known’ 0% Starting Rate for Savings that allows some savers to earn up to £5,000 extra in interest tax-free.
• Combined with Personal and Savings allowances, some can earn £18,570 before paying a penny in tax.
• Over 15 million adults in the UK fall below the £12,570 Personal Allowance threshold, with approximately 392,000 “Savers Rate” taxpayers.
• New Savings Tax Guide launched to help savers make the most of their money before the April 5th deadline.

While headlines often focus on the ‘tax trap’ facing high earners, Atom bank is highlighting a little-known tax-free benefit for millions of lower-income workers and retirees.

Leveraging the often-overlooked Starting Rate for Savings, individuals with a non-savings income of less than £17,570 may qualify to earn a portion of their savings interest at a 0% tax rate, which HMRC applies automatically. When this is combined with the standard Personal Allowance and the Personal Savings Allowance (PSA), those whose non-savings income is £12,570 or less can have a total tax-free income threshold that reaches £18,570.

How does it work?

You can benefit from the Starting Rate for Savings if you earn up to £17,570. However, it is important to remember that for every £1 earned over the £12,570 Personal Allowance, the £5,000 Starting Rate for Savings is reduced by £1. This means that, for those earning £12,571 or more, the tax free allowance ‘tapers’ down the closer you get to £17,570 in earnings.

While they are past their peak, savings rates remain high following a prolonged period of base rate hikes, so being aware of this rule is vital for those on low wages or retirees looking to make their hard-earned cash go further. However, with the tax year ending on April 5th, the window to utilise this year’s allowances is closing fast.

The ‘Triple Allowance’ breakdown explained:

• Personal Allowance (£12,570): The base amount you can earn from any source tax-free.
• Starting Rate for Savings (Up to £5,000): A 0% tax rate on savings interest for those with lower earned income.
• Personal Savings Allowance (£1,000): The standard allowance for basic-rate taxpayers.

Who could benefit?

This tax benefit is a win for the UK’s lowest earners and retirees, particularly those who may have modest incomes but have managed to build up a “nest egg” of savings over time.

Currently, over 15 million adults in the UK fall below the £12,570 Personal Allowance threshold1, meaning they pay no tax on their wages or pensions and are eligible for the maximum £5,000 Starting Rate for Savings.

Within this group sits a group of approximately 392,000 “Savers Rate” taxpayers2. These are individuals whose non-savings income is so low that the only reason they are classified as taxpayers is because of the interest they are earning on their cash. For these savers, the combination of high interest rates and the £18,570 loophole offers a rare opportunity to significantly grow their wealth without the taxman taking a cut.

Savings expert and Chief Commercial Officer at Atom bank, Chris Storey, said:

“Most people think the tax-free limit stops at £1,000 of interest, but for the millions of retirees or those earning a lower income, the reality is much more generous. By reading up on how the Starting Rate for Savings is applied by HMRC, you might find that you’ve got more room to save and earn interest at a 0% tax rate than you previously thought. We’ve published a really useful guide to help savers understand the various allowances and make the most of their savings interest before the end of the tax year.

“A powerful alternative worth considering is an ISA. These accounts offer a separate, generous tax-free contribution limit of £20,000 per tax year. An ISA can be great if your savings are approaching the limits of your allowances, as all interest earned within it is entirely tax-free for the lifetime of the product, protecting your wealth no matter how much you earn in the future.”

ENDS

Data and Calculations

1. Non-taxpayer population estimate: The figure of 15 million non-taxpayers is calculated by comparing the most recent HMRC Income Tax Liabilities data with ONS Adult Population estimates. HMRC Table 2.1 (Number of individual income taxpayers by marginal rate) identifies approximately 35.5 million active income taxpayers in the UK. When subtracted from the ONS estimate of roughly 54 million adults currently residing in the UK, this reveals a “taxpayer gap” of over 15 million individuals whose annual earnings sit below the £12,570 Personal Allowance.
2. The “savers rate” group: The figure of 392,000 “Savers Rate” taxpayers is sourced directly from HMRC’s Summary Statistics. This group is uniquely defined as individuals whose only income tax liability arises from their savings interest.

About Atom bank

For Atom

Jen Shepherd, jen.shepherd@atombank.co.uk

Atom bank is the UK’s highest rated bank on Trustpilot*, and is on a mission to make the experience of borrowing and saving faster, simpler and better value than anyone else. The bank launched operations in April 2016 as the UK’s first app-based bank, and offers award-winning mortgages and savings through its app, alongside secured business lending for small and medium-sized enterprises.

Based in the North East of England with a team of nearly 600 people, Atom is here to ​​change banking for the good, for the better, and for everyone. This means focusing on customers’ needs, delivering better value than the incumbents, providing an exceptional app-based experience and offering award-winning customer support via phone, chat, email and social channels. The bank has some of the best customer service credentials in the UK, having achieved 5-star ratings on both the iOS and Android App Stores, whilst consistently delivering Net Promoter Scores (NPS) in the high 80s.

Based in Newcastle, Atom is an engaged and active member of the North East Community. In 2022 Atom signed a five-year Memorandum of Understanding with Durham University to progress key research and diversity initiatives. The region has one of the highest levels of youth unemployment in the UK and Atom is passionate about addressing the critical digital skills gap and helping develop young people and other groups that are under-represented within the industry. In 2024, Atom purchased 25 acres of newly planted broadleaf woodland in Northumberland to sequester 7000 tonnes of carbon, which will account for all its operational emissions since founding. This forms part of the bank’s pledge to be climate positive by 2035, becoming the first UK bank to make this commitment.

As of November 2021, all employees enjoy a four-day working week, after Atom became the largest company - and only bank - in Britain to introduce the policy for all employees, with no reduction in salary.

The Atom executive team are highly experienced, having built and run some of the most well-respected banks in the UK. CEO Mark Mullen has 30 years’ experience in the sector and was previously CEO at the multi- award-winning telephone and internet bank first direct. The team is supported by a strong non-exec board, chaired by Lee Rochford.

*Based on 19,131 reviews, as of 23/02/2026.