Best UK Savings Accounts June 2025 | Up to 7% Interest
7 June 2025
IMPORTANT DISCLAIMER: This guide is for educational purposes only and does not constitute personal financial advice. Interest rates change frequently and your personal circumstances will determine what's most suitable for you. Always verify current rates with providers and consider seeking independent financial advice for your specific situation.
Reading time: 5 minutes
Why Savings Accounts Matter Right Now
The Bank of England has cut rates from 5.25% to 4.25%, but the best savings accounts still offer 4-7%. This creates a rare opportunity where savings rates significantly beat the base rate.
Here's what many UK households are missing: Most keep savings in accounts paying 0.1-1%. According to Finder's 2025 research, the average person in the UK has £16,067 in savings - at 0.5%, that earns just £80 annually. In competitive accounts, it could potentially earn £643. That's a possible difference of £563 per year.
The reality is shocking: With the cost of living crisis affecting millions, Finder's research shows 1 in 6 UK adults (16%) have no savings at all, while a quarter (23%) have £200 or less. For those who have managed to save, earning minimal interest adds insult to injury.
With rates likely to fall further, acting now means capturing better returns while they're still available.
Current Best Rates (June 2025)
| Account Type | Provider | Rate | Minimum | Key Detail | Apply |
|---|---|---|---|---|---|
| Cash ISA | Moneybox | 5.46% | £500 | Rate drops to 3.95% after 3 months | Visit |
| Cash ISA | Plum | 4.85% | £1 | 12-month bonus rate | Visit |
| Easy Access | Atom Bank | 4.75% | £0 | Rate drops to 2.50% if you withdraw | Visit |
| Regular Saver | First Direct | 7.00% | £25-£300/month | Requires current account, 12 months | Visit |
| Easy Access | Marcus | 4.01% | £1 | No restrictions, reliable | Visit |
Understanding Tax on Savings
Important: You pay income tax on ANY earnings from savings above these allowances:
- Basic rate taxpayers (earning under £50,270): £1,000 tax-free per year
- Higher rate taxpayers (£50,270-£125,140): £500 tax-free per year
- Additional rate taxpayers (over £125,140): £0 tax-free
What this means in practice:
- Nurse earning £35k with £8k savings: At 4% = £320 interest. Well under £1,000 allowance, so no tax.
- Manager earning £85k with £20k savings: At 4% = £800 interest. Over £500 allowance, so pays 40% tax on £300 = £120 tax bill.
This is why ISAs (where ALL interest is tax-free) become more valuable for higher earners or those with significant savings.
Not sure which tax band you're in? Use the TellMyTax calculator to understand your exact take-home pay and tax rate.
How to Switch Safely
When Switching Makes Sense
The impact varies by amount saved:
- £1k at 0.5% = £5/year vs 4% = £40/year (£35 extra)
- £10k at 0.5% = £50/year vs 4% = £400/year (£350 extra)
- £30k at 0.5% = £150/year vs 4% = £1,200/year (£1,050 extra)
Generally worth researching if:
- You have over £1,000 in low-rate accounts (under 2%)
- You're earning less than £100 annually on £5,000+ savings
- Your current account pays 0.1-1% on significant balances
Credit Score Protection
The 6-month rule: Limit to 1-2 new accounts every 6 months. Space applications 6-8 weeks apart.
Why this matters: Multiple applications in short periods can lower your credit score, potentially affecting future mortgage or loan rates.
Safe approach:
- Use eligibility checkers first (soft search, no impact)
- Start with your existing bank (often pre-approved)
- Apply for one priority account, wait before adding others
- Consider which accounts you actually need vs want
Switching Process Reality
Timeline expectations:
- Application: 10-15 minutes online
- Account opening: 3-7 working days
- Money transfer: Same day to 3 working days
- ISA transfers: Up to 15 working days
For existing ISAs: Always transfer through providers - withdrawing and redepositing loses your tax wrapper permanently for that money.
Frequently Asked Questions
Are these rates guaranteed? No, all rates are variable and can change. However, many include temporary bonuses - always check what the rate becomes after bonuses end.
How long does switching take? Online applications take 10 minutes. Account opening is usually 3-7 days. ISA transfers can take up to 15 working days.
Is my money safe? Yes, all accounts mentioned are FSCS protected up to £85,000 per bank. This means your money is protected even if the bank fails.
What if I need to withdraw money? Easy access accounts allow instant withdrawals. Some have penalties (like Atom Bank's rate drop). ISAs have annual limits - check terms before opening.
Do I need to pay tax on savings interest? Basic rate taxpayers can earn £1,000 interest tax-free per year. Higher rate taxpayers get £500. ISA interest is always tax-free.
Should I choose an ISA or regular savings? ISAs are worth it if you'll exceed your personal savings allowance or want future tax protection. For smaller amounts, regular savings often pay better rates.
Can I have multiple accounts? Yes, but you can only pay into one Cash ISA per tax year. You can have multiple easy access accounts with different providers.
Taking Action
Start simple: Pick one account that matches your priority need. The biggest mistake is doing nothing while rates remain at these attractive levels.
Ready to explore your options? Start by understanding your exact take-home pay and tax position with TellMyTax, then research the most suitable account types using the guidance above.
Important: Interest rates change frequently. Always verify current rates directly with providers before applying. This guide is for informational purposes only and does not constitute financial advice.