Overview of the HMRC £18,570 tax-free personal allowance boost
In March 2026 HMRC announced a change that can increase the tax-free amount available for some savers to £18,570 under the savings rule. This article explains who may benefit and how the change works in plain terms.
The update affects how savings income is taxed alongside other income. It is aimed at people whose non-savings income is low enough to access an additional allowance for savings interest.
Which taxpayers may get the £18,570 tax-free benefit
The boost applies where the savings rule is triggered. Typically this means individuals whose earned or pension income is low, so they qualify for a higher combined tax-free amount that includes savings income.
Common groups who may benefit include retirees, part-time workers, and people with low taxable employment income but larger savings interest.
Who usually qualifies under the savings rule
Qualification commonly depends on the level of non-savings income. If that income falls below a set threshold then a higher tax-free allowance can apply to savings interest.
HMRC uses income bands to decide whether savings income is taxed at 0% or at your usual rate. The March 2026 announcement effectively increases the zero-rate amount available to eligible savers to £18,570.
How the £18,570 figure works in practice
The boost means that some taxpayers may have up to £18,570 of combined personal and savings allowances that are tax-free. This reduces the amount of interest that is liable to income tax.
It does not mean everyone receives this amount. Your other income remains the key factor in determining eligibility.
Simple steps to check if you benefit
- Check your total non-savings income for the tax year, including wages and pensions.
- Compare that figure to the threshold HMRC uses for the savings rule, as set out in the March 2026 guidance.
- If your non-savings income is below the threshold you may get the boosted tax-free amount on savings.
How to claim the savings rule boost
Claiming may be automatic for many people if their employer or pension provider uses the correct tax code. Others may need to contact HMRC or complete a self assessment.
If you receive interest and think you should benefit but are paying tax, do this:
- Check your payslip or pension tax code for adjustments.
- Contact HMRC by phone or online to query your tax code.
- Keep records of bank statements and interest statements for the tax year.
Record keeping and evidence
HMRC may need proof of interest received and details of other income. Keep annual interest statements from banks and building societies and P60s or pension payslips.
Accurate records make resolving tax code issues faster and reduce the risk of overpaying tax on savings interest.
Real-world example: small case study
Case study: Sarah is 67 and receives a state pension of 8,000 per year. She also has savings that earn 1,500 interest annually. Under the March 2026 change Sarah checks HMRC guidance and finds her non-savings income is low enough to trigger the savings rule.
With the boost she can keep more of her savings interest tax-free. She contacts HMRC, confirms her tax code, and does not need to complete self assessment. Her interest remains untaxed up to the combined £18,570 amount.
Practical tips to make the most of the change
- Review your income sources early in the tax year to see if you qualify.
- Check bank and building society interest statements and add them to your records.
- Contact HMRC promptly if your tax code looks incorrect after the change.
- Consider speaking to an independent tax adviser if you have multiple income sources or complex affairs.
Common questions and answers about the savings rule boost
Will everyone get a new tax code?
Not necessarily. HMRC may update tax codes where it has accurate information, but individuals should still check their code and contact HMRC if it looks wrong.
Do I need to change how I hold savings?
Holding savings in different accounts does not change eligibility. What matters is total interest and non-savings income. However interest timing and account types may affect reporting, so keep clear records.
Next steps and action checklist
- Check your total non-savings income now and at the start of the next tax year.
- Collect interest statements and P60s for the past year.
- If you believe you qualify, contact HMRC or check your personal tax account online.
- Consider a short consultation with a tax adviser if you have property, dividends or foreign income that complicates matters.
Keeping records and checking your tax code are the quickest practical actions you can take to benefit from the boost announced by HMRC in March 2026. If in doubt seek professional advice to confirm how the savings rule applies to your situation.