Tax on £300,000 Savings

£300,000 in savings at 4.5% earns £13,500 interest per year. Tax payable: £2,500 (basic rate), £5,200 (higher rate), £6,075 (additional rate).

With £300,000 in savings at 4.5%, your annual interest is £13,500. This exceeds the Personal Savings Allowance at every tax band. A basic rate taxpayer pays £2,500 in tax, a higher rate taxpayer pays £5,200, and an additional rate taxpayer pays £6,075.

Tax on £300,000 at different interest rates

Rate	Annual interest	Tax (basic)	Tax (higher)	Tax (additional)
3.0%	£9,000	£1,600	£3,400	£4,050
4.0%	£12,000	£2,200	£4,600	£5,400
4.5%	£13,500	£2,500	£5,200	£6,075
5.0%	£15,000	£2,800	£5,800	£6,750
6.0%	£18,000	£3,400	£7,000	£8,100

The Personal Savings Allowance is £1,000 (basic), £500 (higher), or £0 (additional). Interest above the PSA is taxed at your marginal rate.

How to avoid tax on £300,000 savings

With £300,000 in savings, you cannot shelter everything in an ISA in a single year (the allowance is £20,000). But over 15 years of maximum ISA contributions, you could move the full balance into a tax-free wrapper.

In the meantime, prioritise moving your highest-rate savings into ISAs first to maximise the tax saving.

Other strategies to reduce tax on savings interest:

• Use your ISA allowance — £20,000 per year, completely tax-free
• Spread between partners — Each person has their own PSA. If one partner is basic rate (£1,000 PSA) and the other is higher rate (£500 PSA), hold more savings in the basic rate partner's name
• Premium Bonds — Returns are tax-free (prizes instead of interest). Average "prize rate" around 4%
• NS&I products — Some National Savings products offer tax-free returns

At what savings level do you start paying tax?

At 4.5%, the PSA breakeven points are:

• Basic rate (£1,000 PSA): Tax-free on savings up to £22,222
• Higher rate (£500 PSA): Tax-free on savings up to £11,111
• Additional rate (£0 PSA): Tax on all savings interest from £1

Your £300,000 exceeds the basic rate threshold of £22,222, so all taxpayers will pay some tax on the interest at 4.5%.

Tax on other savings amounts

• £280,000: £12,600 interest, £2,320 tax (basic rate)
• £290,000: £13,050 interest, £2,410 tax (basic rate)
• £310,000: £13,950 interest, £2,590 tax (basic rate)
• £320,000: £14,400 interest, £2,680 tax (basic rate)

Frequently asked questions

Do I pay tax on £300,000 in savings?

At 4.5%, £300,000 earns £13,500 interest. A basic rate taxpayer pays £2,500 tax (interest exceeds the £1,000 PSA). A higher rate taxpayer pays £5,200.

What is the Personal Savings Allowance?

The PSA lets you earn savings interest tax-free each year: £1,000 for basic rate taxpayers, £500 for higher rate, and £0 for additional rate. Interest above the PSA is taxed at your marginal rate.

Should I put my £300,000 savings in an ISA?

You should maximise your £20,000 annual ISA allowance. Over 15 years, you could shelter all £300,000 in ISAs.