A leading personal finance expert has issued an urgent call to action for savers across the UK, urging them to complete one simple task before their January payday arrives. According to Rajan Lakhani, Head of Money at the money management app Plum, setting up an "autosave" rule could unlock a potential £1,164 in savings over the course of the year.
The Power of Automated Saving
An "autosave" rule is a feature commonly found within modern banking and financial apps that automatically transfers a predetermined amount of money from your current account into a savings or investment pot at regular intervals. The primary benefit is the removal of manual effort, making consistent saving a seamless, background process.
"Setting up a payday autosaver can provide a stress-free way to save every month, helping you stay consistent and reach your long-term financial goals," said Lakhani. "It’s one simple action everyone can do before January payday that will help build savings almost without you realising."
The Numbers Behind the Strategy
Plum's analysis of 2025 data reveals compelling figures. The average worker who utilised auto-saving tools managed to put away £97 per month. For someone starting this habit in January, this translates to a total of £1,164 saved by December.
The potential doesn't stop there. If those savings are placed into a high-interest account offering a rate above 4%, the total could grow to approximately £1,210 by year's end, thanks to compound interest.
Lakhani emphasised the broader financial benefits: "By automatically setting this money aside each time you get paid, you’re building excellent financial habits and accumulating a savings safety net that can provide vital peace of mind. That money could be put towards a long-term financial goal, such as a house deposit, or ensure you’re able to cover unexpected expenses."
Where to Find Autosave Features
This functionality is now widely available. Several popular digital banks and financial apps, including Monzo, Starling, Revolut, and Chase, offer built-in autosave or round-up features designed to make saving effortless for their customers.
Understanding Savings Tax Implications
As your savings pot grows, it's crucial to understand the tax rules. Basic-rate taxpayers benefit from a Personal Savings Allowance, allowing them to earn up to £1,000 in savings interest each tax year before any tax is due. Interest above this limit is taxed at 20%.
The allowance is reduced for higher-rate taxpayers, who only have a £500 allowance before facing a 40% tax rate on additional interest. Additional rate taxpayers do not receive an allowance and pay 45% tax on all savings interest.
Analysis from investment platform AJ Bell indicates that an estimated 2.64 million people are expected to be liable for tax on their savings interest in the 2025/26 tax year.
The ISA Advantage
A key method for shielding savings from tax is through an Individual Savings Account (ISA). Interest or growth within an ISA is completely tax-free. Currently, the annual ISA subscription limit is £20,000, which can be split across different types of ISAs.
However, changes are on the horizon. From April 2027, the specific limit for cash ISAs will be reduced to £12,000 for individuals under 65. The overall £20,000 ISA allowance remains, meaning under-65s could, for example, save £12,000 in a cash ISA and £8,000 in a stocks and shares ISA. Savers aged 65 and over will not be affected by this new cap and will retain the full £20,000 allowance for cash ISAs.
In summary, taking a few minutes to activate an autosave feature before your next payday could set you on a path to significant annual savings, fostering better financial habits and building a crucial buffer for future goals or unforeseen costs.
