A finance specialist is advising UK residents to take a specific action before their January paycheck to potentially unlock savings of up to £1,164. Rajan Lakhani, who heads the financial department at Plum, is recommending setting up an “autosave” rule within their banking application.
The “autosave” rule is a tool in banking apps that automatically moves funds into a savings account or investment portfolio at scheduled intervals. This eliminates the need for manual transfers to boost savings.
Research conducted by Plum reveals that on average, individuals used auto-saving features to stash £97 per month into savings in 2025. By starting this process in January, one could accumulate £1,164 by year-end. If these funds are deposited 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” functionalities include Monzo, Starling, Revolut, and Chase. Lakhani emphasizes the benefits of setting up a payday autosaver, highlighting its role in fostering consistent saving habits and helping individuals achieve 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 on interest exceeding £500 yearly, while additional rate taxpayers are subject to a 45% tax on all savings interest.
ISA accounts provide a tax-efficient savings option, allowing individuals to save up to £20,000 across various accounts each tax year. However, starting from April 2027, the cash ISA limit for under-65s will decrease to £12,000. The overall ISA limit remains at £20,000, permitting diversified savings strategies across cash and stocks and shares ISAs.
The new cap on cash ISA limits will not affect over-65s, who can continue saving up to £20,000 annually into cash ISAs. This presents a tax-efficient solution for long-term savings goals and financial security.