Brits are being advised by a personal finance expert to take a specific action before their January payday to potentially unlock savings of up to £1,164.
The Head of Money at money management app Plum, Rajan Lakhani, is encouraging individuals to establish an “autosave” rule within their banking app.
Essentially, an “autosave” rule is a functionality in a banking app that automatically moves money into a savings account or investment pot at predetermined intervals.
This feature eliminates the need for manual transfers to allocate funds to savings.
Based on an analysis conducted by Plum, the average worker utilized auto-saving tools to save approximately £97 per month in 2025.
Setting up this system in January could result in £1,164 saved by the year’s end. By transferring the funds to a high-interest savings account with a rate exceeding 4%, the total savings could grow to around £1,210.
Digital banks like Monzo, Starling, Revolut, and Chase are among the popular options offering “autosave” features.
Rajan Lakhani emphasized the benefits of creating a payday autosaver, stating that it provides a hassle-free method to save consistently each month, aiding individuals in achieving their long-term financial objectives.
By automatically allocating a portion of each paycheck to savings, individuals can develop positive financial habits and build a safety net for unexpected expenses or long-term goals such as a house deposit.
Basic-rate taxpayers can earn up to £1,000 in savings interest annually before incurring tax, known as the personal savings allowance. Going beyond this limit results in a 20% tax on additional savings interest for higher-rate taxpayers and a 40% tax for higher-rate taxpayers exceeding £500 in savings interest per year.
Additional rate taxpayers face a 45% tax on all savings interest. AJ Bell’s analysis suggests that 2.64 million individuals will be subject to tax on savings in the 2025/26 tax year.
Savings held in an ISA account are not taxable. The current annual limit for saving across various ISA accounts is £20,000, with a reduction to £12,000 for cash ISAs for those under 65 starting April 2027.
The overall £20,000 ISA limit remains unchanged, allowing for a split between cash and stocks and shares ISAs. Over-65s are unaffected by the cash ISA limit reduction and can continue saving up to £20,000 annually into a cash ISA.