A finance expert is advising UK residents to take a specific action before their January payday to potentially unlock savings amounting to £1,164. Rajan Lakhani, the Head of Money at the financial management app Plum, suggests setting up an “autosave” rule on banking apps. This feature automatically transfers funds into a savings account or investment pot at regular intervals, eliminating the need for manual transfers.
Plum’s analysis reveals that on average, individuals used auto-saving tools to save £97 per month in 2025. By initiating this before January, individuals could have £1,164 saved by the year’s end. If these funds are placed in a high-interest savings account with a rate exceeding 4%, the total savings could grow to around £1,210.
Popular digital banks like Monzo, Starling, Revolut, and Chase offer “autosave” functionalities. Lakhani emphasizes that setting up a payday autosaver can create a stress-free way to save consistently, aiding in achieving long-term financial objectives and building a safety net.
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 40% tax when exceeding £500 in savings interest, while additional rate taxpayers are subject to a 45% tax. Savings in an ISA account are tax-free, with the current annual limit set at £20,000, to be reduced to £12,000 for cash ISAs from April 2027 for individuals under 65.
For those over 65, the £20,000 ISA limit remains unaffected, allowing continued savings into cash ISAs without restrictions.