A financial expert is advising UK residents to take a specific action before their January payday to potentially save up to £1,164. Rajan Lakhani, who leads the Money division at money management app Plum, suggests setting up an “autosave” function on their banking app.
The “autosave” feature automatically moves funds from your account into a savings or investment account at scheduled intervals, eliminating the need for manual transfers. Plum’s analysis reveals that on average, individuals used auto-saving tools to save £97 monthly in 2025.
By starting in January, individuals could accumulate £1,164 by year-end. If these funds are placed in a high-interest savings account with a rate exceeding 4%, the savings could grow to approximately £1,210. Popular digital banks offering “autosave” capabilities include Monzo, Starling, Revolut, and Chase.
Rajan Lakhani emphasizes that setting up a payday autosaver can facilitate consistent saving, aiding in achieving long-term financial objectives. This simple action before January payday can establish good financial habits and create a safety net for unexpected expenses or long-term goals like a house deposit.
Basic-rate taxpayers can earn up to £1,000 in savings interest annually before incurring tax, known as the personal savings allowance. Beyond this threshold, taxes apply, with higher-rate taxpayers facing a 40% tax rate above £500 in savings interest per year. Additional rate taxpayers are subject to a 45% tax on all savings interest.
Savings in an ISA account are tax-free, with a current annual limit of £20,000 across different ISA accounts. However, starting April 2027, the cash ISA limit for under-65s will decrease to £12,000, maintaining an overall £20,000 ISA limit. Over-65s are unaffected by this change and can continue saving up to £20,000 annually into a cash ISA.
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