A financial expert suggests that individuals in the UK take a critical step before their January payday to potentially save up to £1,164. Rajan Lakhani, the Head of Money at the money management app Plum, is promoting the idea of setting up an “autosave” rule within banking apps.
This rule allows for automatic transfers of funds into a savings account or investment portfolio at specified intervals, removing the need for manual transfers. Plum’s analysis indicates that on average, individuals used auto-saving tools to save around £97 per month in 2025.
By initiating this process before January, individuals could accumulate £1,164 by the year’s end. If these funds are placed in a high-interest savings account with a rate exceeding 4%, the savings could increase to approximately £1,210. Popular digital banks such as Monzo, Starling, Revolut, and Chase offer “autosave” features.
Lakhani emphasized the benefits of a payday autosaver, highlighting its role in fostering consistent savings habits and helping individuals achieve long-term financial goals. This automated approach aids in building a financial safety net and peace of mind, enabling individuals to save for significant goals like a house deposit or unexpected expenses.
Basic-rate taxpayers can earn up to £1,000 in savings interest annually before incurring tax, known as the personal savings allowance. Any interest earned beyond this amount is subject to a 20% tax for higher-rate taxpayers earning over £500 in savings interest per year.
Furthermore, additional rate taxpayers face a 45% tax on all savings interest. Notably, savings kept in an ISA account are tax-free. The current limit for saving across various ISA accounts is £20,000 per tax year, with the cash ISA limit set to decrease to £12,000 for under-65s from April 2027.
For individuals over 65, the new cap does not apply, allowing them to continue saving up to £20,000 annually in a cash ISA.