What does the Personal Savings Allowance mean for you?

Your Personal Savings Allowance (PSA) is the tax-free allowance that lets you earn interest on savings without having to pay tax on this interest amount. Since April 2016, savers have been able to grow their savings tax free thanks to the PSA. Most people will have no tax to pay on the return they receive on savings, up to £1,000 due to the PSA. This means you can receive up to £1,000 in interest, without paying tax on this amount.

If you are in the higher rate tax bracket , your PSA is £500. This means you can receive up to £500 in savings income without paying tax on this amount.

As a credit union member, you receive an annual dividend* as your return on savings, so you might be wondering what the PSA means for you.

What counts as ‘interest’?

It is important to understand what counts as an interest payment.

The PSA takes into account your savings income from bank accounts, and this includes your credit union savings account. Voyager Alliance Credit Union is not-for-profit organisation; this means any surplus after our administration costs have been paid, is returned to members as an annual dividend which is taxable if you receive over £1,000 as a return on your savings across your financial accounts.

Savings income from these accounts is included in your PSA

So, what does the PSA mean for you?

We are thrilled that our members have taken home a share of over half a million pounds.

We are proud that our members received a return of 1.55% on their savings, and £548,000 has now been paid to members as our annual dividend for the financial year from 1st October 2021 to 30th September 2022**

If your return on savings across all your bank, building society and credit union accounts is below your PSA, this will be completely tax free. However, if you earn more than your PSA from your return on savings, the amount over your allowance is taxable. This tax amount depends on your annual income.

Check out Which’s short video to find out more about how the PSA works.

What to do if you savings income is over PSA

Here’s what to do if you receive over your PSA and do have to pay tax on your savings income.

If you normally complete your own tax return, you should include this amount of savings income you have received in the relevant section.

If you do not normally complete a tax return, but have received over your PSA in savings income, you should inform HMRC and they will be able to resolve this for you.


  1. In the last tax year tax year, Mr A earns £25,000 per year from his full-time job as a Bus Driver. He received £300 of savings income from Voyager Alliance’s latest dividend payment. He has to pay tax on his salary like normal, but his £200 dividend payment is tax free due to the Personal Savings Allowance.

  2. On the other hand, if Mrs Z earns £25,000 per year from her full time job, but receives:
    £300 dividend from Voyager Alliance
    £500 savings income from her bank account
    £300 from her building society

    As this is £1,100 in savings income, Mrs Z would need to declare this to HMRC.

Take a look at Money Saving Expert and GOV.UK for more information

* Dividends are not guaranteed. The rate payable is dependent on financial performance and voted on by members at the Annual General Meeting.

** As Voyager Alliance and Retail CU members joined the Penny Post Group part way through the financial year, they will receive dividends* on a pro-rata basis for the period from 1st February to 30th September 2022.