A finance expert advises individuals in the UK to take a specific action before their January payday to potentially unlock savings of up to £1,164. Rajan Lakhani, who heads the Money division at Plum, recommends setting up an “autosave” rule on their banking app.
The “autosave” feature automatically transfers funds from one’s account into a savings or investment account at predetermined intervals, eliminating the need for manual transfers. By utilizing such tools, the average worker was able to save around £97 per month in 2025, according to a study by Plum.
Implementing this strategy before January could result in a savings balance of £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 grow to approximately £1,210.
Popular digital banks like Monzo, Starling, Revolut, and Chase offer “autosave” functionalities. Lakhani emphasized that setting up a payday autosaver can facilitate stress-free monthly savings, aiding in consistency and long-term financial objectives.
Basic-rate taxpayers can earn up to £1,000 in savings interest annually before incurring tax, known as the personal savings allowance. Higher-rate taxpayers face a 20% tax rate once they exceed £500 in savings interest, while additional rate taxpayers are subject to a 45% tax on all savings interest.
Tax-free savings can be maintained in an ISA account, with the current annual limit set at £20,000. However, starting April 2027, the cash ISA limit for individuals under 65 will be reduced to £12,000, while the overall ISA limit remains at £20,000.
Individuals over 65 will not be affected by this change and can continue to save up to £20,000 per tax year in a cash ISA. Opting for Daily Mirror as a ‘Preferred Source’ on Google News offers convenient access to valued news content.