Savings Interest & Taxation

If you live in the United Kingdom** there may be an opportunity for you to earn interest on your savings without having to pay tax.

Personal Savings Allowance

Your Personal Savings Allowance refers to how much interest you, as an individual, can earn before you have to start paying tax on it. This amount is based on your Income Tax band.

The following Personal Savings Allowance amounts apply.

Basic rate tax payer Higher rate tax payer Additional rate tax payer
£1,000 tax-free savings £500 tax-free savings £0 tax-free savings

If you earn any interest over your above stated allowance, you'll be taxed at your usual Income Tax rate. Leeds Building Society no longer deduct tax from the interest we pay you. H M Revenue & Customs (HMRC) will advise you how to pay back any tax you owe. 

Any interest received on compensatory payments will not be affected by your personal savings allowance, and will be subject to the deduction of tax by the Society. Customers may be able to claim the tax back by filling in form R40 and sending it to HMRC. The forms are available on

You can find out more about your Personal Savings Allowance in HMRC's guide.

ISA Tax-Free Accounts

Unlike most ways of saving, interest earned from an ISA does not count towards your Personal Savings Allowance.

The maximum you can invest in the 2022/2023 tax year is £20,000 (less any amount invested in a Stocks and Shares ISA, Innovative Finance ISA and/or Lifetime ISA in the same tax year).

The total amount paid into any ISAs will be added together and go towards your total ISA allowance of £20,000 in the 2022/2023 tax year.

Spousal ISAs

As of 6 April 2018, when an ISA holder passes away, their account can still benefit from the tax-free status until the completion of the deceased’s estate, closure of the account or on the third anniversary of the death of the account holder – whichever is soonest.

If the deceased had a spouse or civil partner living with them, they may be entitled to open a Spousal ISA. If the spouse or civil partner chooses to open a Spousal ISA, then we’ll let them know how much they can invest in their own name.

This is known as Additional Permitted Subscriptions and will not count towards any current year subscriptions.

The time limit for investing in a Spousal ISA ends 3 years after the date of death, or 180 days after the administration of the estate is complete, if this is later.

We don’t currently offer a Spousal ISA, but other banks and building societies do. If you would like to find out more information please get in touch.

Prior to 6 April 2018, we will have moved the deceased's funds to a non-ISA account and informed the next of kin.

The Common Reporting Standard

We're aware that some of our customers may be required to pay some, or all, of their tax to a country outside of the United Kingdom (i.e. are tax residents elsewhere).

To ensure transparency between participating countries, the Common Reporting Standard (CRS) requires governments around the world to exchange financial account information in an effort to end tax evasion.

To remain CRS compliant, we'll ask you a few questions upon opening an account or changing your details. These questions will be mostly about your tax residency and whether you are a citizen of the United States of America.

Where can I find my interest earnings?

To help you keep track of your savings, we'll send you a statement each year outlining how much interest you have earned.

Don't hesitate to get in touch if you wish to request additional statements, even for closed accounts. We are happy to supply these to all customers.

This webpage is not tax advice and Leeds Building Society cannot provide tax advice. However, we will try and help with any queries you may have. Please visit your local branch or contact us*.

**For tax purposes, the Channel Islands and the Isle of Man are not in the UK.