Britons are being advised by a financial expert to take a crucial step prior to their January payday in order to potentially unlock savings of £1,164. Rajan Lakhani, who serves as the Head of Money at the money management app Plum, is advocating for individuals to establish an “autosave” rule within their banking application.
This “autosave” feature functions by automatically transferring funds into a savings account or investment portfolio at specified intervals, eliminating the need for manual transfers. Data from Plum reveals that on average, workers utilized auto-saving tools to save £97 monthly in 2025.
By initiating this strategy before January payday, individuals could accumulate £1,164 in savings by year-end. If these funds were placed in a high-interest savings account with a rate exceeding 4%, the savings could increase to approximately £1,210. Popular digital banks like Monzo, Starling, Revolut, and Chase offer “autosave” functionalities.
Rajan Lakhani emphasized the benefits of setting up a payday autosaver, emphasizing its role in fostering consistent savings habits and aiding in achieving long-term financial objectives. This approach not only facilitates stress-free saving but also builds a financial safety net for unforeseen expenses or long-term goals like a house deposit.
Moreover, basic-rate taxpayers can earn up to £1,000 in savings interest annually before being subject to tax under the personal savings allowance. Higher-rate taxpayers face a 40% tax on savings interest exceeding £500 a year, while additional rate taxpayers are taxed at 45%. Notably, savings held in an ISA account are exempt from tax, with a current yearly limit of £20,000 across various ISA accounts.
Starting from April 2027, the cash ISA limit for under-65s will decrease to £12,000 annually, while the overall ISA limit remains at £20,000. Over-65s are unaffected by this change and can continue saving up to £20,000 each tax year in a cash ISA.