A finance expert advises UK residents 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 the Plum money management app, suggests setting up an “autosave” rule within their banking app.
An “autosave” rule functions by automatically moving funds from your account into a savings or investment account at specified 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 starting this strategy in January, individuals could accumulate £1,164 by the year’s end. If these funds are placed into a high-interest savings account with a rate exceeding 4%, the total savings could grow to approximately £1,210. Popular digital banks offering “autosave” features include Monzo, Starling, Revolut, and Chase.
Lakhani emphasized the benefits of setting up a payday autosaver, citing its stress-free nature and ability to foster consistent saving habits. This method aids in achieving long-term financial goals and building a financial safety net for unexpected expenses or major investments, like a house deposit.
Basic-rate taxpayers can earn up to £1,000 in savings interest annually before incurring taxes, known as the personal savings allowance. Higher-rate taxpayers face a 40% tax on savings interest exceeding £500 per year, while additional rate taxpayers are subject to a 45% tax on all savings interest. Notably, savings held in an ISA account are tax-free, with a current yearly limit of £20,000, though this will decrease to £12,000 for cash ISAs by April 2027 for under-65s.
Individuals aged over 65 remain unaffected by this change and can continue saving up to £20,000 annually in a cash ISA.