What is the starting rate for savings?
Answered 11 March 2026
What the law says
The starting rate for savings is 0%, as set out in the Income Tax Act 2007 (ITA 2007), s. 7(1).
This rate applies to so much of an individual's income up to the starting rate limit for savings as:
- (a) is savings income, and
- (b) would otherwise be charged at the basic rate or the default basic rate.
The starting rate limit for savings is £5,000 (subject to indexation under s. 21 of ITA 2007).
Important distinction: There is also a separate savings nil rate (also 0%) under s. 7(2) and s. 12A ITA 2007, which applies to savings income above the starting rate limit for savings, up to the amount of an individual's savings allowance. Although both rates are 0%, they operate under different statutory provisions and apply to different bands of income.
The starting rate for savings was created by the Finance Act 2008 (abolishing the previous starting rate and savings rate) with effect from the tax year 2008–09 onwards.
No HMRC guidance sources were present in the retrieved documents for this question.
Citation sources
Part 2 Basic provisions Chapter 2 Rates at which income tax is charged The rates The starting rate for savings and savings nil rate 7 1 The starting rate for savings is 0%. 2 The savings nil rate is 0%
Part 1 Charges, rates, allowances, reliefs etc Income tax Abolition of starting and savings rates and creation of starting rate for savings 5 1 Section 6 of ITA 2007 (rates at which income tax is charged) is amended as follows. 2 In subsection (1), omit paragraph (a). 3 In subsection (2), omit “starting rate,”. 4 In subsection (3), for paragraph (a) substitute— a section 7 (starting rate for savings), . 5 Accordingly, in the heading omit “ starting rate, ”. 6 The amendments made by this section
Part 2 Basic provisions Chapter 2 Rates at which income tax is charged Income charged at particular rates Income charged at the starting rate for savings 12 1 Income tax is charged at the starting rate for savings ... on so much of an individual's income up to the starting rate limit for savings as— a is savings income, and b would otherwise be charged at the basic rate or the default basic rate . 2 This is subject to any provisions of the Income Tax Acts (apart from section 10) which provide fo
Part 2 Basic provisions Chapter 2 Rates at which income tax is charged Income charged at particular rates Savings income charged at the savings nil rate 12A 1 This section applies in relation to an individual if— a the amount of the individual's Step 3 income is greater than £L, where £L is the amount of the starting rate limit for savings, and b when the individual's Step 3 income is split into two parts— i one (“the individual's income up to the starting rate for savings”) consisting of the lo