The amount of interest one can earn tax-free depends on several factors including the taxpayer's income level and tax band:

• There is a Personal Allowance (standard income tax allowance) of £12,570 for the tax year 2024-2025, which can be used to earn interest tax-free.
• For savings interest specifically, there is a "Starting Rate for Savings" of up to £5,000 where interest is tax-free, but this allowance decreases by £1 for every £1 of other income above the Personal Allowance. If other income exceeds £17,570, this starting rate is not available.
• There is also a Personal Savings Allowance (PSA) which lets:
  • Basic-rate taxpayers (20%) earn up to £1,000 in savings interest tax-free.
  • Higher-rate taxpayers (40%) earn up to £500 in interest tax-free.
  • Additional-rate taxpayers (45%) get no allowance.
• Therefore, combining these, basic-rate taxpayers with low other income can earn up to £6,000 (£5,000 starting rate + £1,000 PSA) in interest tax-free, but this reduces as other income rises.
• Interest from ISAs and premium bond winnings is tax-free regardless of amounts.

In summary, tax-free interest can be up to about £6,000 depending on income and tax band, with a maximum £5,000 starting rate savings allowance (which tapers with income) and a PSA of £1,000 for basic-rate taxpayers or £500 for higher-rate taxpayers.